After relief from high interest rates, relief from inflation has also started. A research report by Bank of Baroda (BOB) has estimated that the retail inflation rate of April may remain below 3%. Official data will be released next week on Tuesday (May 13). The report says that in recent weeks, the prices of food items, especially vegetables, have come down by 34% and the prices of pulses have come down by 15%. However, the prices of edible oil have increased by 30%. Its effect will hardly be seen on inflation because sunflower oil has become the most expensive, whose weightage in the inflation index is less than 1%. Hopes of loans becoming cheaper increased, decision in June The report says that the reduction in inflation will create scope for the Reserve Bank to reduce policy rates further. In the June meeting, the repo rate may be cut more than before (0.25%). Due to less heat in tomato, onion, potato producing states, production will increase, prices may come down further. Vegetarian thali got 4% cheaper in April: Crisil According to the ‘Roti Rice Report’ of rating agency Crisil, the cost of a typical vegetarian thali came down by 4% to Rs 26.3 in April. The cost of the thali has come down by 1% on a monthly basis. According to the report, the thali has become cheaper due to the fall in vegetable prices. Inflation was at a 6-year low in March Retail inflation came down to 3.34% in March. Earlier, in August 2019, inflation was at 3.28%. It has come down to a 5 year 7 month low. A month before March, i.e. in February, inflation was at 3.61%. Food items contribute around 50% to the inflation basket. Its inflation has come down from 3.75% to 2.67% on a month-on-month basis. On the other hand, rural inflation has decreased from 3.79% to 3.25% and urban inflation has increased from 3.32% to 3.43%. How does inflation increase and decrease? The increase and decrease of inflation depends on the demand and supply of the product. If people have more money, they will buy more things. Buying more things will increase the demand for things and if the supply is not according to the demand, the price of these things will increase. In this way, the market comes under the grip of inflation. In simple words, excessive flow of money or shortage of things in the market causes inflation. On the other hand, if the demand is less and the supply is more, then inflation will be less. Inflation is determined by CPI. As a customer, you and I buy goods from the retail market. The Consumer Price Index i.e. CPI does the work of showing the change in prices related to this. CPI measures the average price we pay for goods and services. Apart from crude oil, commodity prices, manufactured cost, there are many other things which play an important role in determining the retail inflation rate. There are about 300 items on the basis of whose prices the retail inflation rate is decided.
