Core inflation likely to remain elevated in remaining FY23: Ind-Ra
Credit rating agency, India Ratings and Research (Ind-Ra) in its ‘December Credit Market Tracker’ has forecasted that the core inflation is likely to remain elevated in the remaining FY23, given that there is a pending pass-through of higher input costs by producers and a continued robust demand in the economy. The country’s retail inflation, measured by the Consumer Price Index (CPI), decreased to 5.88 per cent in the month of November 2022 as compared to 6.77 per cent in October 2022.
As per the report, the surplus liquidity in the banking system has improved in December 2022 compared to November 2022. The surplus liquidity rose moderately to Rs 1115 billion (average up to December 19, 2022) from Rs 454 billion (average for November 2022), largely driven by foreign inflows to equity market and government spending.
According to the LAF data, the Reserve Bank of India (RBI) injected liquidity in the banking system in November 2022 to offset the tightening liquidity. However, it said that the liquidity conditions may tighten further due to a deficit in India’s balance of payments in FY23 and a seasonal uptick in the currency leakage in Q4.
