(CTN News) – There is a report from Reuters late on Tuesday stating that the government expects retail inflation in India to ease by the end of the year due to seasonal factors becoming more favorable, citing Finance Secretary T V Somanathan.
For a second consecutive month, retail inflation in India remained above the upper end of the central bank’s tolerance band of 2 per cent-6 per cent in August, even though it eased from a 15-month high of 7.44 per cent recorded in July, when the inflation rate was at a 15-year high.
Somanathan believes that the seasonal factors in terms of inflation rate are beginning to become more favourable, and that a reduction in inflation rate by the end of the year will be a very real possibility.
There have been sharp spikes in food prices as erratic weather patterns have affected the production of staple foods such as vegetables, milk, and cereals,
Which is one of the main causes of inflation in recent months.
It is expected that retail inflation will drop to 5.7 percent in the December quarter, and then it will cool further to 5.4 percent in fiscal 2024, according to the Indian central bank.
According to Somanathan, despite the inclusion of Indian bonds in the widely followed emerging market debt index of JPMorgan, the country’s policy discretion remains open as far as regulation and taxation goes in order to safeguard the macroeconomic interests of the country.
JPMorgan’s Government Bond Index-Emerging Markets (GBI-EM) is set to include India’s local bonds as of June 28, 2024 as part of its Government Bond Index-Emerging Markets (GBI-EM).
Additionally, the finance secretary stated that India is committed to achieving a fiscal deficit of less than 4.5 percent of GDP by the end of 2025-26 and is on track to reach that goal by the end of the decade.
The country is targeting a deficit of 5.9 percent by the end of the fiscal year ending March 31, 2024, which will be the last day of the fiscal year.