While inflation is expected to be elevated in 2022-23, mitigating action taken by the government and RBI may reduce its duration, the finance ministry said in its monthly economic review report, while promising action to alleviate price rise pain. India's inflation likely accelerated to 18-month high in April, according to a Reuters poll, from 6.95% in March.Evidence on consumption patterns further suggests that inflation in India has a lesser impact on low-income strata than on high-income groups, the report noted. To contain inflation going out of control, Reserve Bank has raised its key lending rate off record lows at an off-cycle meeting earlier in May. Markets see the Reserve Bank of India hiking its key rates further in the coming months as inflation remains elevated.Reuters reported the Monetary Policy Committee (MPC) will consider more rate hikes in June meeting and raise the forecast for the current fiscal.
The country has also been importing oil from sanctions-hit Russia at discounted rates to ease some of the pressure from surging crude prices, which recently touched $139 a barrel.India meets nearly 80% of its oil needs through imports and rising crude prices push up the country's trade and current account deficit while also hurting the rupee and fuelling imported inflation.
The finance ministry monthly report further said the rising food and energy prices are a global phenomenon and even several advanced nations have higher inflation rates than India.