The amount of medication used to treat the disease is important – it is poisonous when the dose is too high; The lower the dose, the lower the risk. The issue’s end has the recaptured Doomsday in the control of the US Government. Developing countries such as India, in general, have been unsuccessful in the recent past in trying to achieve an encouraging relatively high inflation rate by surpassing a low inflation rate, usually from Japan.
What should be the ideal inflation rate then? Oliver Blanchard, the then chief economist of the International Monetary Fund (IMF) in 2010, dared to give a definite answer to this complex question. “An average inflation rate of 8 per cent annually,” he said. In the West, it was considered a relatively high rate, with support for such a high inflation rate from Nobel laureate economist Paul Krugman to renowned Harvard economist George Monkey. In their opinion, this rate is conducive to trade as well as does not pose a risk of pushing the economy towards sluggishness or precipitation.
It is unknown at this time what he will do after leaving the post. At that time, by March 31, 2021, the Reserve Bank of India was tasked with stabilizing the “headline inflation” in the country at a rate of 6 per cent. Of course, it is not entirely strict, it has a limit of two hundred and two hundred percent tolerance on it – that is, it is the responsibility of the Reserve Bank to limit the inflation rate between two hundred and eight percent. Against this backdrop, the rate at which the inflation in the Indian economy, which has been plagued by Chinese cronies for almost a year, was reported to be satisfactory to the Reserve Bank in January.
The lowest inflation rate in the last 18 months was January 8, 2008. It would not be wrong to say that this is equivalent to the standard rate of 8 per cent described earlier. Because the inflation rate is so satisfactorily low, it will help keep the RBI low on interest rates for the recovery of the economy; Otherwise, the RBI would have been forced to raise interest rates to curb inflation. High interest rates would naturally discourage investment and trade. The RBI is not optimistic about the declining inflation rate, but predicts that the inflation rate will reach 5-5.2 per cent in the first half of the 2021-22 fiscal year, which is certainly within the all-time limit.
So while the inflationary situation is so comfortable for the Reserve Bank of India, it has an inherent audacity, which is a cause for concern for the Reserve Bank of India as it creates discomfort for the person wearing the thorns hiding inside a comfortable shoe. The Reserve Bank fears. It is not surprising that the inflation rate is now so low due to the impact of the downturn on the demand side of the economy due to the sharp decline in employment and income in the coveted economy. But one of the contradictions that lies hidden in the inflation rate of this 9.08 percent headline is that if you look at the ‘seed inflation’, except for the chops that cover it, it looks like this ‘Seed inflation’ Above average: 5.8 percent.
What is called cover here is inflation due to rising food and fuel prices. Separating the food and fuel inflation from the ‘headline inflation’, the only thing that remains is ‘seed inflation’. Although there has been a significant increase in fuel prices during this time, sharp cuts in the prices of family leaves and other food items have left it ineffective. Food inflation fell to 3.41 percent in December, down from 1.8 percent in January, the lowest in the last 20 months. Experts predict that vegetable prices will remain relatively low for the next six to nine months.
Although ‘headline inflation’ remains so low due to the declining impact of food inflation, it is naturally worrying that non-food-fuel inflation is so high. This is because non-food inflation is usually higher. They are now raising the price of all of their produce to make up for the losses suffered by industrial enterprises during the epidemic. The epidemic has plagued small-scale industries, and large-scale industries have been forced to control the supply chain.
“It simply came to our notice then. The current low interest rates and high consumer rates are helping them make a profit by compensating for them as soon as possible. “Especially in the service sector, there is a huge increase in the price of the sector,” he said.
As this seed acts as a thorn in the inflationary shoe, the Reserve Bank will inevitably be reluctant to raise interest rates again in the near future. However, as before, the RBI expects inflation to be 5.0 to 5.2 percent in the first half of the next fiscal year, which is below the 7.0 percent threshold, which could prevent interest rates from rising at this time.