New Delhi: Chief Economic Advisor (CEA) K V Subramaniam has expressed confidence that retail inflation will come down in the coming days after the lockdown was relaxed. He said inflation has increased due to supply constraints. According to government data, the rate of retail inflation has increased to 6.93 percent in July. Retail inflation has increased mainly due to increase in prices of vegetables, pulses, meat and fish. However, WPI inflation declined by 0.58 percent in July.
Subramaniam said, “If you look at inflation, it is mainly because of supply side problems. However, these barriers will be overcome after the local lockdown is relaxed. “Overall, the difference in wholesale and retail inflation is due to supply-side factors.” These problems will be overcome further. In this case, retail inflation will also soften. “
It is expected that retail inflation will remain at an elevated level for the rest of the year. With this, the Reserve Bank will no longer have room for policy rate cuts. The six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, has been given a target to keep annual retail inflation at four percent (up or down two percent) by 31 March 2021.
