Food price pressures threaten the 4% inflation target: RBI message
Pressure on food prices is preventing retail inflation from falling as quickly to the Reserve Bank’s 4% objective, according to a Tuesday item on the “State of Economy” in the central bank’s March bulletin.
Based on the Consumer Price Index (CPI), retail inflation has been declining since December and was at 5.09 percent in February. The article, written by a group led by RBI Deputy Governor Michael Debabrata Patra, stated that “even as inflation is on the ebb with broad-based softening of core inflation, the repetitive incidence of short amplitude food price pressures deters a swifter fall in headline inflation towards the target of 4%.”
The report went on to say that the world economy is losing momentum, with growth in some of the strongest nations decreasing and high frequency indicators suggesting further leveling down in the near future.
In the third quarter of the fiscal year 2023–24, India’s real GDP growth reached a six-quarter high, driven by solid indirect taxes, decreased subsidies, and strong momentum.
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According to the report, structural demand and stronger bank and corporate balance sheets will probably be the driving forces behind future development.
The Reserve Bank of India remarked that the opinions stated in the bulletin article are those of the writers and do not necessarily reflect the opinions of the central bank.
