A Reserve Bank of India (RBI) paper on Tuesday said that while the initial inflationary pressure was due to successive supply shocks, a“revenge rebound” in spending is now generalising price pressures and making them persistent.
The paper, which analysed the inflation trajectory in the country after February, said that supply-side shocks resulting from the Russia-Ukrainewar pushed retail inflation beyond the RBI’s upper tolerance level of 6 per cent.
While headline CPI inflation, which remained above 6per cent since January, moderated by 90 basis points to 5.9per cent in November, driven by a fall in vegetable prices, core inflation remained sticky at 6 per cent.
