Is Low Inflation a Positive Sign for Economic Growth, Experts Say?
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Synopsis
India's retail inflation has seen a slight rise, but remains below the RBI's target, indicating a possible boost to economic growth. Experts highlight the significance of low inflation in creating a supportive economic environment. This article explores the latest inflation figures and their implications for the Indian economy.
Key Takeaways
- Retail inflation in India rose to 0.71 percent in November.
- It remains below the RBI's target of 4 percent.
- Food prices continue to exert downward pressure on inflation.
- Urban inflation stands at 1.40 percent, while rural inflation is 0.10 percent.
- Key items like vegetables and pulses saw significant price declines.
New Delhi, Dec 12 (NationPress) The retail inflation rate in India saw a slight increase in November, yet it remained significantly below the Reserve Bank of India's (RBI) target, which continues to bolster the nation's economic growth outlook, according to market analysts.
Retail inflation was recorded at 0.71 percent in November, rising from 0.25 percent in October, as stated by Vineet Nahata, Director at Power Gilt Treasuries, in an interview with IANS.
Even with this monthly rise, he emphasized that the figure is over 3 percentage points lower than the RBI's 4 percent target, indicating a positive macroeconomic landscape.
“The low inflation rate is a very encouraging sign for the economy, providing a conducive environment for ongoing growth,” Nahata remarked during his discussion with IANS.
Statistics released by the Ministry of Statistics and Programme Implementation highlighted a notable divide between urban and rural inflation.
Urban retail inflation registered at 1.40 percent, while the rural inflation rate was much lower at 0.10 percent.
Food prices continued to apply downward pressure on the overall inflation rate.
The food inflation rate was recorded at –3.91 percent in November, with rural areas experiencing a decline of –4.05 percent and urban areas at –3.60 percent.
Disaggregated data revealed that the costs of essential items such as vegetables (–22.20 percent), pulses (–15.86 percent), and spices (–2.89 percent) saw significant reductions compared to the same period last year.
Conversely, certain categories experienced price increases: cereals (0.10 percent), meat and fish (2.50 percent), eggs (3.77 percent), milk (2.45 percent), oils and fats (7.87 percent), fruits (6.87 percent), sugar (4.02 percent), and non-alcoholic beverages (2.92 percent).
Nahata also provided insights into the evolving discussions surrounding the India-US trade agreement, mentioning that further clarity is anticipated shortly.
His comments followed those of India’s Chief Economic Adviser V. Anantha Nageswaran, who indicated that the trade deal could be finalized by March, with tariff specifics expected to be revealed thereafter.
Point of View
It is imperative to highlight that while the inflation figures show a slight rise, they still remain well within a manageable range. This scenario presents a stable outlook for consumers and investors alike. With ongoing discussions about the India-US trade agreement, the economic landscape appears promising, supporting our belief in the resilience of the Indian economy.
NationPress
13/12/2025
Frequently Asked Questions
What is the current retail inflation rate in India?
The current retail inflation rate in India is 0.71 percent for November, which reflects a slight increase from 0.25 percent in October.
How does the current inflation rate compare to the RBI's target?
The current inflation rate is over 3 percentage points below the RBI's target of 4 percent, indicating a favorable economic environment.
What are the main contributors to the recent inflation figures?
Key contributors include significant declines in food prices, especially in vegetables, pulses, and spices, which have exerted downward pressure on overall inflation.
What impact does low inflation have on the economy?
Low inflation is considered positive as it supports consumer spending and investment, creating a conducive environment for economic growth.
What can be expected regarding the India-US trade agreement?
Further clarity on the India-US trade agreement is expected soon, with indications that it may be finalized by March, as per the Chief Economic Adviser.
