Inflation in India is expected to fall to 5 pc. in 2023 and 4 pc. in 2024: IMF

Inflation inside India is expected to fall from 6.8 percent in the current fiscal year ending March 31 to 5 percent in the next fiscal year, then fall further to 4 percent in 2024, the International Monetary Fund (IMF) said Tuesday.

“Inflation in India and other countries is expected to fall from 6.8 percent in 2022 to 5 percent in 2023 and then 4 percent towards the target in 2024.” Daniel LeighDepartment head, Research Department of the IMF told reporters here.

“That partly reflects the actions of the central bank,” he added World economic outlook update published by the IMF on Tuesday, about 84 percent of countries are expected to have lower headline inflation (consumer price index) in 2023 than in 2022.

Global inflation is expected to fall from 8.8 percent in 2022 (annual average) to 6.6 percent in 2023 and 4.3 percent in 2024 – above pre-pandemic (2017-2019) levels of about 3.5 percent, said the.

The expected disinflation is partly due to declining international fuel and non-fuel commodity prices due to weaker global demand. It also reflects the cooling effects of monetary policy tightening on underlying (core) inflation, which is expected to decline globally from 6.9 percent in the fourth quarter of 2022 (on an annual basis) to 4.5 percent in the fourth quarter. quarter of 2023, the IMF said. .

“Still, disinflation will take time: by 2024, expected annual average aggregate and core inflation will still be above pre-pandemic levels in 82 percent and 86 percent of economies, respectively,” the report said.

In developed economies, average annual inflation is expected to decline from 7.3 percent in 2022 to 4.6 percent in 2023 and 2.6 percent in 2024 — above target in several cases. In emerging markets and emerging economies, projected annual inflation will fall from 9.9 percent in 2022 to 8.1 percent in 2023 and 5.5 percent in 2024, above the pre-pandemic average of 4.9 percent (2017-2019), said the IMF.

In low-income developing countries, inflation is expected to moderate from 14.2 percent in 2022 to 8.6 percent in 2024 — still high, but close to the pre-pandemic average, it said.

In a blog post, Pierre-Olivier Gourinchaswrote Chief Economist and Director, Research Department of the IMF, that global inflation is expected to decline this year, but even by 2024, expected average annual aggregate and core inflation will still be above pre-existing levels in more than 80 percent of countries the pandemic.

“Inflation news is encouraging, but the battle is far from over. Monetary policy is starting to bite, with housing construction slowing down in many countries. Still, inflation-adjusted interest rates remain low or even negative in the euro area and other economies, and there is great uncertainty about both the speed and effectiveness of monetary tightening in many countries,” said Gourinchas.