Inflation in India expected to reduce to 5% in 2023, 4% in 2024: IMF
By Team Newsable | First Published Jan 31, 2023, 7:58 AM ISTStill, disinflation will take time: by 2024, projected annual average consumer price index and core inflation will, respectively, still be above pre-pandemic levels in 82 to 86 per cent of economies, the IMF said.
The International Monetary Fund (IMF) has said that inflation in India may come down from 6.8 per cent in the current fiscal year ending March 31 to five per cent in the next fiscal and continue to drop further to four per cent in 2024.
Daniel Leigh, Division Chief of the IMF Research Department, said that this partly reflected the central bank's actions.
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Eighty-four per cent of countries are expected to have lower consumer price index inflation in 2023 than in 2022, the World Economic Outlook update released by the IMF on Tuesday pointed out.
Global inflation is set to fall to 6.6 per cent in 2023 compared to 8.8 per cent in 2022 (annual average) and then further to 4.3 per cent in 2024. That would still be above pre-pandemic (2017-19) levels of about 3.5 per cent, it said.
Declining international fuel and non-fuel commodity prices due to weaker global demand is partly viewed as a reflection of the projected disinflation. It is also a reflection of the cooling effects of monetary policy tightening on underlying (core) inflation, which globally is expected to decline to 4.5 per cent by the fourth quarter of 2023 from 6.9 per cent in the fourth quarter of 2022 (year over year).
Still, disinflation will take time: by 2024, projected annual average consumer price index and core inflation will, respectively, still be above pre-pandemic levels in 82 to 86 per cent of economies, it said.
In advanced economies, annual average inflation is projected to decline to 4.6 per cent in 2023 from 7.3 per cent in 2022 and then further to 2.6 per cent in 2024.
In emerging markets and developing economies, projected annual inflation declines to 8.1 per cent in 2023 from 9.9 per cent in 2022 and then further down to 5.5 per cent in 2024, above the 4.9 per cent pre-pandemic (2017-19) average.
In low-income developing countries, inflation is projected to moderate to 8.6 per cent in 2024 from 14.2 per cent in 2022.
In a blog post, IMF Chief Economist and Research Department Director Pierre-Olivier Gourinchas wrote that even though the inflation news is encouraging, but the 'battle is far from won'. With a slowdown in new home construction in many countries, monetary policy has started to bite. Yet, inflation-adjusted interest rates remain low or even negative in the Euro area and other economies, and there is significant uncertainty about both the speed and effectiveness of monetary tightening in many countries, Gourinchas said.
Also Read: 2023 to be tougher year for global economy, warns IMF Chief Kristaline Georgieva
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