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Due to nonseasonal rains, supply constraints, lockdown and other concerns, retail inflation exceeded the RBI's target this year and will deliver a setback in the new year as well. Experts say that retail inflation based on the Consumer Price Index will remain around 6.3 per cent in the current financial year.
Inflation jolted this year due to nonseasonal rains, supply constraints, lock-down and other concerns.
Experts say retail inflation is expected to pick up in the near term as the economy slows down. The rise in food prices kept the retail inflation rate high throughout the year. It remained in the range of 6.58 to 7.61 per cent throughout the year, excluding the level of 5.91 per cent in March.
At the same time, inflation based on wholesale prices remained at the lowest level of (-) 3.37 per cent in May and 3.1 per cent in January amid problems related to the supply chain. Due to the epidemic and lock-down, the country's economy has started showing signs of recovery once again. However, in 2020 the government also did not release retail inflation data for April and May as officials could not reach the area for survey due to the lock-down.
Lack of pockets for potato, onion and tomato
Due to the high level of retail inflation, people had to loosen pockets to buy tomatoes, onions and potatoes. However, concerned about their prices, the government started the 'Operation Greens' initiative two years ago. Its objective is to ensure adequate availability of potatoes, onions and tomatoes at reasonable prices across the country.
The price of these three major vegetables used by Indian cooks ranged between Rs 60 and 80 per kg due to unseasonable rains affecting production and disrupting supply in lock-down. According to the RBI, bumper yields of kharif may reduce the prices of cereals, but prices of winter vegetables and other food items are expected to remain high.
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