New Delhi: Fitch Group company India Rating & Research said on Wednesday that the recent rise in inflation in the country is temporary and is expected to soften in the coming times. According to the agency, the average rate of retail inflation is expected to be 3.9 percent and wholesale inflation will be 1.3 percent in 2020-21.
In the current financial year 2019-20, the person is expected to have an average of 4.4 percent of retail inflation and 1.4 percent of wholesale inflation. India Rating said that in view of the rise in inflation, policy rate cuts are unlikely. In the coming times, the Reserve Bank can keep the key policy rate as before. The Reserve Bank will present the next monetary policy review on February 6.
Let us know that retail inflation reached 7.35 percent in December 2019, which was 5.54 percent in November last month. At the same time, wholesale inflation rose to 2.59 percent in December 2019, which was 0.58 percent in November.
In this regard, Sunil Kumar Sinha, Director (Public Finance) and Chief Economist of the rating agency said that the recent rise in inflation is due to the rise in food prices. However, this is temporary. Regarding exports, India Rating said that the environment remains challenging regarding the global economy. This is due to trade tensions between the US and China and the adoption of protectionist policy by many developed economies.
According to the rating agency, due to this, there is a possibility of a 2 percent fall in the goods and services exports in the current financial year. However, he said that given the recent success in the US-China trade talks, the situation may change globally in the next financial year. It will also have an impact on India's goods and services exports and may increase by 7.2 percent.
Due to this, the current account deficit can reduce marginally to $ 32.7 billion (1.1 percent of GDP). It is estimated to be $ 33.9 billion (1.2 percent of GDP) in the current financial year.
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