The Reserve Bank, which had set a retail inflation target of around 6 per cent by January 2016, expects the rate of price rise to be around 5 per cent by the end of 2016-17 financial year..Meanwhile, if the monsoon returns to normal, food prices will ease, as the government remains committed to disciplined increase in minimum support prices for cereals and the rural wage growth remains muted, it said.Global commodity prices such as crude oil, metals and cereals continued to decline across the globe in 2015-16, notwithstanding a few short spells of rebound.The Economic Survey 2015-16 on Friday said that another year of below-potential growth will mean widening of output gap, resulting into additional downward pressure on underlying inflation, which has already fallen below 5 per cent.
We therefore think that the effective stance of monetary policy could be relaxed,” said the survey document tabled by finance minister Arun Jaitley in Parliament.75 per cent in 2016-17 against 7. It pegs the long-term potential at 8-10 per cent if exports grow rapidly. “Oil prices have plunged in the first two months of 2016, as have some commodity prices, suggesting that input prices are likely to be lower next fiscal year.The government has projected the economy to expand by 7-7.6 per cent projected for current fiscal.The government is expecting retail inflation to ease to the level of 4.The survey expects that further price pressure relief should come from abroad.5-5 per cent in 2016-17 mainly due to continued downward pressure on global commodity prices and prospects of a normal monsoon.69 per cent, the highest in last 16 months.
Beyond this factor lie other deflationary forces.“For all these reasons, we project that consumer price index (CPI) inflation will ease to between 4.However, the Survey said the part of this might be off-set by upward pressure coming from a depreciation wholesale Automobile Parts Finish of the rupee, especially if the US Federal Reserve Bank continues to raise interest rates, prompting capital flows to the US, although the prospects of aggressive Fed action are receding. In January, retail inflation was at 5.All this suggests that the RBI should be able to meet its target of 5 per cent (retail or CPI inflation) by March 2017, it said.5-5 per cent in 2016-17. As growth in China continues to slow, excess capacity there could continue to increase, which will put further downward pressure on the prices of tradable goods all around the world,” it said.It suggests that oil prices will average $35 per barrel in the next fiscal year compared to $45 per barrel in 2015-16
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