Inflation in India is more than simply a ‘cost-push’ phenomenon; an availability of liquidity has also played a role.
The Reserve Bank of India’s (RBI) recent move to raise the repo rate by 40 basis points and the cash reserve requirement (CRR) by 50 basis points reflects the seriousness of our country’s inflation problem and the determination to address it. In practically all countries, inflation has reached dangerous levels. The issue is the worse in the United States, where consumer price inflation hit 8.56 percent in March 2022, a level not seen in decades. In March 2022, India’s consumer price index (CPI) inflation rate was 6.95 percent. In April, it is likely to grow much more. India’s
CPI inflation has been fluctuating around a high level. As early as October 2020, it had hit a peak of 7.61%. It had remained at a high level of over 6% since April 2020. It did come down after December 2020 but has started rising significantly from January 2022.