retail inflation It is gradually decreasing, but high and volatile prices of food items are hampering the reduction in inflation. This was said in the bulletin issued by the Reserve Bank of India on Wednesday. The article published in the June 2024 Bulletin titled ‘State of the Economy’ said that global growth was strong in the first quarter of 2024 and many central banks have turned to some soft monetary policy in view of the decline in inflation in their respective countries. High frequency indicators (GST collection, power consumption, freight, PMI etc.) suggest that the real GDP (gross domestic product) growth rate in India in the first quarter of FY 2024-25 will broadly maintain the momentum achieved in the previous quarter.
Responsibility of keeping inflation at 4 percent
In addition, the early arrival of the southwest monsoon is turning the agricultural prospects positive, the article, written by the team led by RBI Deputy Governor Michael Debabrata Patra, said. The article wrote, “The reason for the softening of retail inflation is the continued decline in core inflation (excluding fuel and food items). However, the path of inflation reduction is being hampered due to volatile and high prices of food items.” RBI has the responsibility to keep retail inflation at four percent with a variation of two percent.
Repo rate steady at 6.50 percent
Earlier this month, the RBI’s Monetary Policy Committee (MPC) kept the policy repo rate unchanged at 6.50 percent. The MPC reiterated its stance to focus on withdrawing the accommodative stance to keep inflation in line with the target while supporting economic growth. The central bank has projected that inflation will decline from 5.4 percent in 2023-24 to 4.5 percent in 2024-25. The RBI said that the views expressed in the article are those of the authors and do not represent the views of the central bank.
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