Image used for representational purposes. | Photo credit: Sushil Kumar Verma

Inflation in India is expected to decline from 6.8% in the current fiscal year ending March 31 to 5% in the next fiscal year and then drop to 4% in 2024, the International Monetary Fund said on Tuesday ( IMF).

“Inflation in India, as in other countries, is expected to decline from 6.8% in 2022 to 5% in 2023 and then to 4% towards the target in 2024,” said Daniel Leigh, division chief of the IMF Research Department, to reporters in Washington. here.

Read also: IMF retains growth projections for India; the economy is expected to slow to 6.1% in 2023 from 6.8% in 2022

“Part of that reflects the actions of the central bank,” he added.

According to the World Economic Outlook update released Tuesday by the IMF, around 84% of countries are expected to experience lower headline inflation (consumer price index) in 2023 than in 2022.

Global inflation is expected to decline from 8.8% in 2022 (annual average) to 6.6% in 2023 and 4.3% in 2024 – above pre-pandemic (2017-2019) levels by around 3.5%, he said.

The projected disinflation partly reflects lower international fuel and non-fuel commodity prices due to weaker global demand. This also reflects the cooling effects of monetary policy tightening on underlying (core) inflation, which is expected to decline broadly from 6.9% in the fourth quarter of 2022 (year-on-year) to 4.5% in the fourth quarter. 2023, the IMF said. .

Also read: Inflation accelerates to 7.41%, the highest since April

“Nevertheless, disinflation will take time: by 2024, projected annual average headline inflation and core inflation will, respectively, still be above pre-pandemic levels in 82% and 86% of economies” , did he declare.

In advanced economies, average annual inflation is projected to rise from 7.3% in 2022 to 4.6% in 2023 and 2.6% in 2024 – above target in several cases. In emerging markets and developing economies, projected annual inflation rises from 9.9% in 2022 to 8.1% in 2023 and 5.5% in 2024, above the average of 4.9% before the pandemic (2017-2019), the IMF said.

In low-income developing countries, inflation is expected to moderate from 14.2% in 2022 to 8.6% in 2024 – still high, but close to the pre-pandemic average, he added. .

Also read: Wholesale price inflation drops to 4.95% in December 2022

In a blog post, Pierre-Olivier Gourinchas, Chief Economist and Director of the IMF’s Research Department, wrote that global inflation is expected to decline this year, but even by 2024 average annual inflation and Expected core inflation will still be higher than before the pandemic. levels in more than 80% of countries.

“The news on inflation is encouraging, but the battle is far from over. Monetary policy has started to bite, with a slowdown in new housing construction in many countries. Yet inflation-adjusted interest rates remain low or even negative in the euro area and other economies, and there is significant uncertainty about the speed and effectiveness of monetary tightening in many country,” Mr. Gourinchas said.