RBI On Inflation: If the sharp rise in inflation is not controlled, it can cause huge losses to the Indian economy. Banking sector regulator Reserve Bank of India has said these things in the bulletin issued for the month of November. According to RBI, the surge in consumption during the festive season and recovery in the agricultural sector have supported the economy in the second quarter of the current financial year 2024-25 and offset the slowdown in demand. But uncontrolled increase in inflation rate can harm the real economy.
cost of living increased
In an article written in the RBI Bulletin regarding the state of the economy, it was said that there has been a sharp jump in the retail inflation rate in the month of October and this justifies the warnings given by the RBI regarding inflation in September. In the bulletin, RBI said that inflation has increased due to the sharp rise in the prices of food items and edible oils. According to RBI, due to increase in the wages of people who work at home or cook at home, the pressure of expenditure on people’s living has increased.
Loss to industry and exports due to inflation
RBI has stressed the need to keep an eye on the selling prices of these things after the increase in input costs in goods and services. According to RBI, due to inflation, consumption demand is already being reduced in urban areas and this has also affected the earnings and capital expenditure of corporates. In such a situation, if the inflation rate is allowed to increase without any control, it will cause harm to the economy including industry and exports.
Burden of inflation on middle class in cities
RBI has also admitted that due to inflation, consumption is being reduced in urban areas. These companies have also reiterated the same in the results of the second quarter which the FMCG companies have declared. FMCG companies said that due to back-breaking inflation, the demand for FMCG and food items in urban areas has been affected. Nestle CEO Suresh Narayan even said that people who have money are spending a lot. But the hands of the middle class are tight. In fact, in October 2024, the retail inflation rate has reached a 14-month high of 6.21 percent, while the food inflation rate has been around 10.87 percent of 11 percent.
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