The agency has projected consumer price index (CPI)-based inflation to be 6.8 per cent in 2022-23, compared to 2021-22, in view of pressure on food prices in the current fiscal. This is slightly higher than the Reserve Bank of India’s (RBI) estimate of 6.7 per cent.
RBI has been citing the rise in inflation as the main reason for Russia-Ukraine war and consequent rise in commodity prices. Inflation continues to remain above the Reserve Bank’s satisfactory level (2-6 per cent).
At present, the share of food articles in the Consumer Price Index is 39 per cent.
Crisil Research said in a report, “The main reason for the inflation rate of food articles is lack of supply. The reason for the short supply is the sudden increase in domestic heat with the Russo-Ukraine war.
“We expect consumer price index based inflation to be 6.8 per cent,” the rating agency said. This is based on the estimate of food inflation to be at the level of 7 per cent.
According to the report, the inflation rate of food items is a major challenge before the Monetary Policy Committee. As the summer progressed, the average temperature in northwest and central India reached a 122-year high. The rise in mercury has affected crops like wheat, groundnut, millet and mango.
Crisil said, “Heavy heat is the main domestic factor which has increased the prices of food items this year. This points to a 2020 RBI study. It added that the macroeconomic impact of climate change on food inflation has been statistically significant for India over the past two decades.
Source: navbharattimes.indiatimes.com
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