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Expensive vegetables create high inflation, only hope for relief after September 2020

Thursday - January 16, 2020 11:18 am , Category : BUSINESS
Inflation now becomes a challenge for a common man after the economic slowdown
 
JAN 16 (WTN) - Inflation has always been a problem that the people of a developing country have to face all the time. Especially in fuel importing countries, inflation is completely dependent on the price of crude oil. As you know, due to the apprehensive of war between the US and Iran, prices of crude oil have been increasing for several days. If there is a war between the US and Iran, it will increase the prices of crude oil drastically, and for this reason, inflation in India will also increase in the same proportion.
 
For your information, let us know that this year due to heavy rain, the prices of many vegetables including onions have gone up sharply, and inflation is increasing due to an increase in the price of vegetables. According to the State Bank of India research report, based on the increase in the prices of vegetables, inflation based on the Consumer Price Index (CPI) in January can go up by more than 8 percent. That is, this month also you may have to face inflation. Let us know that the retail inflation rate released on Monday jumped to a 94-month high of 7.35 percent in December 2019, whereas earlier in the month of November it was 5.54 percent.
 
But the matter of relief for you is that if there is a fall in the prices of vegetables after the month of January, then the rate of inflation may decrease slightly. However, the SBI Research report clearly stated that retail inflation could remain above 7 percent until March. Now that SBI has clearly stated in its report that the rate of inflation can remain at 7 percent or more, the Reserve Bank of India may have to maintain interest rates at its current level in its monetary policy.

Indeed, there are many reasons for rising inflation, including vegetables being expensive. Explain that the SBI's research report has said that if the inflation in food items does not come down, then in the coming time the Indian economy may be in a state of stagflation. Now you may be wondering what is stagflation, then for your information, let us know that when the economic growth rate is weak and for that reason inflation is high then it is called stagnation.
 
For your information, let you know that according to the SBI Research Report, the main reason for the rise in inflation is the rise in the prices of onion, potato, and ginger. Not only this, but the increase in tariff by mobile network companies has also affected inflation by 0.16 percent. After studying all these reasons, it is being said that inflation based on the consumer price index may be more than 8 percent this month. However, it is hoped that after this there can be some improvement.

Now that inflation is seen in increasing, the Reserve Bank may be forced to revisit inflation and growth projections once again. SBI has said in its report that the Reserve Bank had a good opportunity to cut policy rates under its monetary policy in the month of December, but the Reserve Bank may not have thought it appropriate.

Now you must be wondering if inflation will continue in this way. So for your information, let us know that softening is expected in inflation only after September 2020. It is estimated that in the period from December 2020 to January 2021, gross inflation may come down to below 3 percent. That is the Reserve Bank hardly changes its monetary policy in 2020. Explain that while considering monetary policy, RBI mainly considers inflation based on the consumer price index.

That is it is clear that even in times to come, it is difficult to get rid of inflation until the prices of vegetables are under control. At the same time, in the event of increased tension in the Gulf or a war between the US and Iran, if the prices of crude oil increased, it could increase inflation even more. At the moment, there is nothing to fear from inflation, because the prices of vegetables have increased due to the worsening of crops. But if economic slowdown does not get rid of it soon and inflation keeps rising, then it can definitely cause anxiety.

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