Weather and geopolitical unrest pose a danger to inflation, according to RBI

The RBI’s April Bulletin, which was issued on Tuesday, said that while prolonged geopolitical tensions and severe weather events may put inflation at risk, the conditions are favorable for an extension of the trend upward shift in real GDP growth in India.

The Reserve Bank of India (RBI) bases its monetary policy on retail inflation, which is based on the Consumer Price Index (CPI). It decreased to 4.9% in March from 5.1% in the two months before.

According to a Bulletin article on the “State of the Economy,” there will be a boom in the spring of 2024.

All meteorological organizations agree that March 2024 was the hottest March since records were kept in 1850; the average worldwide temperature was 1.66°C (3.01°F) higher than it was between 1880 and 1899.

The India Meteorological Department (IMD) has predicted an above-normal Southwest monsoon this year, which could allow food price pressures to ease, but careful monitoring throughout the summer is necessary as overlapping food price shocks play out, according to a team led by RBI Deputy Governor Michael Debabrata Patra.

However, it said that “prolonged geopolitical tensions and extreme weather events may pose a risk to inflation in the near term, which could keep crude oil prices volatile.”