The retail inflation rate in the country is witnessing a steady increase. In March, retail inflation reached its highest level in the last 17 months. In March 2022, food inflation was 7.68% which increased to 8.38% in April 2022. Last year in April 2021, it was 1.96%.
The main reasons behind this inflation are a rise in prices of edible oil, a fall in the value of rupee against dollar and an increase in fuel prices. This inflation wave has become worrisome as currently, no commodity is untouched by its impact. The inflation rate of edible oil was the highest at 17.28% in April 2022. Similarly, the inflation rate for vegetables also increased to 15.41%. Even the price of spices increased by 10.56% and meat & fish by 6.97%.
At present, inflation is the biggest challenge for our economy. A few days ago, the Government of India also announced a ban on the export of wheat and sugar to control inflation. Parallelly, the RBI also changed the repo rates in May 2022.
Low production of crops
In the 2020-21 crop year, 56.1 million tonnes of potatoes were cultivated whereas 53.6 million tonnes of potatoes have been cultivated so far in the current crop year 2021-22. If we talk about tomatoes, only 21.18 million tonnes of tomato has been produced this crop year which is 20.30 million tonnes less than the previous crop year. There is noted inflation in the prices of vegetables like brinjal, okra and peas. Gram, which accounts for more than 45% of the country’s pulse production, is witnessing inflation of 2.72% in April 2022. Other food item prices are also inflated such as wheat’s prices are inflated by 9.59% at present.
RBI may further increase the repo rate
It is believed that the central bank can increase the repo rate in June as well. In such a situation, interest rates are also likely to increase further. At the same time, the falling price of rupees also remains a big problem for the economy and the government.
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