Current Affairs India: ExplainSpeaking | India’s sticky inflation: Causes and consequences

Sunday, 19 February 2023

ExplainSpeaking | India’s sticky inflation: Causes and consequences

As things stand, it looks quite likely that India’s inflation rate will be above the crucial 4% level in each of the five years of the current government’s term. To be sure, 4% inflation is the target level under the current monetary policy regime.

If inflation stays persistently high (‘sticky’), it would necessitate the RBI to keep raising interest rates — or, at the very least, keep them at a high level for a longer period — and, in doing so, hurt India’s economic recovery out of the twin shocks of the Covid pandemic and the Russia-Ukraine war.