1. Inflation is Falling
Retail inflation in May dropped to 2.8% (lowest in over 6 years).
Wholesale inflation also fell to 0.4%.
Main reason: Drop in food and oil prices.
2. Why Prices Dropped
Oil prices fell due to too much supply and weak global demand.
India imports 80% of its oil, so cheaper oil helped reduce inflation.
RBI now expects 3.7% inflation this year (lower than earlier forecast of 4%).
June’s retail inflation may be as low as 2%.
3. New Risks
Israel-Iran conflict made oil prices jump 8% in one day.
If tensions grow, shipping costs could rise 40-50%, affecting oil supply.
Government is planning to help trade and shipping sectors deal with this.
4. Monsoon Uncertainty
Monsoon is improving, but it's still early.
Uneven rainfall in the past hurt farming areas.
So, food prices may not keep falling.
5. RBI’s Neutral Stance
RBI is ready to either raise or cut interest rates.
This helps respond quickly to changing conditions.
6. Conclusion
Inflation is low for now, but fuel and food prices could rise again.
The situation is uncertain, so policies must stay flexible.
By: Shivam Saxena
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