Retail inflation is back within RBI target range in FY23

According to the Economic Survey 2022-23 tabled by Finance Minister Nirmala Sitharaman, retail inflation is back within the Reserve Bank of India's RBI target range in 2022. The Retail Inflation rate in India was 7.8 per cent in April 2022, according to the survey. Retail inflation at 7.8 per cent was well above the RBI's upper tolerance limit of 6 per cent.

It said that inflation above the upper end of the target range in India was one of the lowest in the world. In FY 23, RBI projected headline inflation at 6.8 per cent, which is outside the target range but neither too high nor too low.

The Economic Survey 2022 -- 23 read: RBI projected headline inflation at 6.8 per cent in FY 23, which is not within its target range. It is not high enough to deter private consumption and not so low as to weaken the inducement to investment. The document reads: Moderately high inflation has resulted in the anchoring of inflationary expectations preventing prices from weakening demand and growth in India. With inflation on the declining path, the interest cost of domestic credit will likely decline, leading to an increase in demand for credit by corporates and retail borrowers. The government took a multi-pronged approach to tame rising prices, as per the survey. Some measures taken by the government include a reduction in the export duty on petrol and diesel, a reduction in import duty on major inputs and a reduction in basic duty on crude and refined palm oil, crude soybean oil and crude sunflower oil, and a reduction in import duty on major inputs from April 14, 2022 to September 30, 2022.

According to the Economic Survey, timely government intervention in the housing sector and home loan interest rates attracted buyers in the affordable housing segment in FY 23. The survey said that a stable to moderate increase in the Composite Housing Price Index HPI indicates retained value of the asset, giving confidence to homeowners and home loan financiers.