India's Peaking Inflation & How To Escape It

The Reserve Bank of India (RBI) indicated that India might be peaking in inflation, putting it on the track to becoming the world's fastest-growing economy in July '22 bulletin. While USA's inflation rate shot up to a 41-year high of 9.1% in June 2022, India's inflation rate was 7.01% in June 2022 compared to 7.04% and 7.79% in the preceding two months, as measured by the Consumer Price Index(CPI).

Multiple signs show that inflation is coming to its peak. In June 2022, there was an outflow of Rs. 49,469 crore- the highest monthly outflow since the Covid-19 pandemic began in March 2020. Also, the foreign portfolio investors(FPIs), for the 9th month in a row, were the net sellers in the Indian equity market according to reports.

How India has a Chance to Escape from Peaking Inflation

As per the monthly State of the Economy Report by RBI, the inflation pressures have now stabilized despite global headwinds. The possible reasons why the economy is moving towards a sustainable growth trajectory in the midterm-

  • Revival of monsoon,
  • Pick up in the manufacturing and services,
  • Strong buffers in the form of sufficient international reserves
  • Adequate food grain stocks and a well-capitalized financial system

Moreover, the continuous fall in the commodity prices alongside ease in the supply-chain pressures can help India escape global peaking inflation.

Michael Debabrata Patra, The Deputy Governor of RBI, in a recent session held at PHDCCI, talked about monetary policy and how it works through into the Indian economy. He also mentioned that inflation in the 4th quarter of FY2022-23 is expected to fall back into the threshold and might fall even further in the next year."

In a nutshell, the Indian economy, marred by the fears of recession and war in a global landscape, is showing resilience in the first quarter of the financial year 2023, says the report. This is a great relief to a common man who has been reeling under inflationary pressures for several months.

CTA: Learn more about the latest news around the world on Tradexapp.