From 11% to 2.2%, five factors explain vanishing India inflation

Inflation is expected to hug the lower band of the RBI’s 2% to 3.5% forecast for the first half of the financial year ending in March and remain below the 3.5% to 4.5% target for the second half. Photo: Mint

Inflation is expected to hug the lower band of the RBI’s 2% to 3.5% forecast for the first half of the financial year ending in March and remain below the 3.5% to 4.5% target for the second half. Photo: Mint

Four years ago Indian inflation was running at more than 11%. Now it’s melted to a record low 2.2%, below Mexico, Turkey and the UK, as the central bank’s battle against price pressures gains traction.

The slide has prompted the Reserve Bank of India, led by Urjit Patel, to slash its inflation forecasts and led one member of its six-person monetary policy committee to break ranks at its 6 June announcement, stoking market speculation the bank could next cut rates, perhaps as early as August.

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Credit: livemint.com