CNBC reports that India has seen an increase in inflation and signs indicate a continuation of this upward trend.

Figures released by India’s Statistics Ministry on TuesdayThe retail inflation rate rose 6.95% from last year’s March. This was the third consecutive month in which retail inflation exceeded the upper tolerance margin at 6%. 

Modi government mandates that the Reserve Bank of India maintain retail inflation at 4.4% and 2% respectively for a period of five years, ending March 2026.

Last week, India’s central bank revised its inflation forecast upwards — from 4.5% to 5.7% — for the current fiscal year ending March 2023. Inflation control is the RBI’s new focus. 

In the current sequence of priorities, inflation has been prioritized over growth. “It is right to put inflation before growth,” Shaktikanta Das, Governor of RBI told reporters in April 9 

The RBI also lowered India’s economic growth forecast for the current fiscal year from 7.8% to 7.2%, citing escalating geopolitical tensions.

According to Sonal Varma (Nomura’s chief economist in India and Asia), inflation will trend higher, and stay above the RBI’s target of 2%-6% for the next twelve months.

“Policy rate are extremely accommodative. She said that the RBI would have to initiate a policy correction beginning in June.

Suyash Rai of Carnegie India suggested that the benchmark interest rate may change.

Rai stated that if the March inflation number leads to a revised prediction, then the RBI could raise rates earlier.

The RBI has kept the benchmark rate steady at 4% since May 2020, maintaining its accommodative stance while suggesting it will be prepared to focus on inflation.

CNBC’s V. Anantha Nageswaran, chief economist of the Indian government said that inflation would rise as expected.

He stated that “the central bank has clearly indicated its commitment to prioritizing inflation control rather than supporting growth.” 

Nageswaran said that the government has taken steps to reduce import duties for palm oil imports in an effort to combat food inflation.

Nageswaran stated that the phenomenon he is dealing with “is a worldwide phenomenon” to CNBC’s Street Signs Asia on Wednesday.

A sign of an economy that is’maturing.

He was asked whether the government would lower fuel tax to offset the rising price of crude.

“If the prices continue at high levels for a quarter, two or more or longer than that, then we will go beyond $110 [a barrel]He stated that the burden must be shared between households and government. However, he noted that public transport should increase fuel use to reduce fuel consumption. 

Nageswaran explained that current inflation anxiety was an indicator of a mature economy.

“The fact that India is now getting exercised about inflation rates that are around 6% to 7% is a sign of a maturing of the Indian economy… because earlier, India’s average inflation rate used to be around 7% for the best of five decades or so, until 2010. However, the fact that we now worry about inflation rates of around 7% is an indication that our expectations are shifting.”