‘Inflation at worrisome levels, oil prices will remain under pressure’

Inflation levels have plummeted and assuming a ‘worrisome’ ratio in India, Moody’s Analytics said Tuesday on Asia’s inflation concerns, driven by rising oil prices.

Saying that India’s retail inflation has been breaking the Reserve Bank of India’s (RBI) 4% inflation target for the past eight months, the financial intelligence firm said that India and the Philippines are two notable exceptions – in Asia – where inflation is at a level of comfort. Is beyond.

“Unsustainable food prices and rising oil prices exceeded India’s CPI (Consumer Price Inflation) by six times the upper band of 6% in 2020, disrupting the RBI’s ability to maintain the monetary setting during the height of the epidemic. happened. Higher fuel prices will keep pressure on the headline CPI and offer further rate cuts to the RBI, ”said the firm, which operates independently of credit rating agency Moody’s Investors Service.

The firm said that India hopes to maintain its existing retail inflation targeting framework for monetary policy, with a target of 4% and a margin of 2% above and below it. To be revised from 1st April this year. “The government is reducing small amendments, including increased flexibility in exceptional times.”

Describing India’s rise in retail inflation as worrisome, the firm said India’s basic CPI (excluding food, fuel and light prices) rose 5.6% in February to 5.3% in January, even in food and beverage. Inflation of the substance also rose from 2.7% to 4.3%. . “Food is a major driver of inflation, representing 46% of the CPI basket,” said Moody’s Analytics.