RBI report highlights inflation challenges and economic prospects

Mumbai: Consumer price-based inflation (CPI) in India is gradually declining, but persistent and volatile food inflation remains a significant concern for the disinflation process, according to a recent article published by the Reserve Bank of India (RBI) in its June bulletin, The Indian Express reported. The report provides insights into the current economic landscape and future growth potential.

Headline inflation, measured by year-on-year changes in the all-India Consumer Price-based Inflation (CPI), decreased to 4.7 percent in May 2024, the lowest rate in the past year, down from 4.8 percent in April. The article states, "Headline inflation is gradually easing, driven by sustained softening of its core component, although the path of disinflation is interrupted by volatile and elevated food prices."

Food inflation (y-o-y) remained steady at 7.9 percent in May. Within food sub-groups, inflation rose for cereals, eggs, fruits, and pulses, while it moderated for meat and fish, milk, sugar, spices, nonalcoholic beverages, and prepared meals. Vegetable prices saw double-digit y-o-y inflation for the seventh consecutive month, while edible oils experienced deflation, albeit at a slower rate than the previous month.

The article, authored by RBI Deputy Governor Michael Patra and other central bank officials, represents the authors' views rather than the institution's official position. The report also points to a positive outlook for agriculture, citing the early arrival of the southwest monsoon. However, the India Meteorological Department (IMD) has forecasted below-normal rainfall for June, with the country receiving 20 percent less rainfall than normal since the monsoon period began on June 1.

Source: IANS