The Reserve Bank of India’s target of keeping retail inflation at 4 percent could take a little longer due to the pressure from food prices. The observation was stated in an article on the ‘State of Economy’ in the central bank’s March Bulletin.
It found that retail inflation based on CPI (Consumer Price Index) currently at 5.09 percent was on a decline since December.
The article authored by a team lead 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 percent.”
It further observed that the global economy was losing steam, with growth slowing in some of the most resilient economies and high frequency indicators pointing to further levelling in the period ahead.
On the other hand, India’s real GDP growth was at a six-quarter high in the third quarter of financial year 2023-24, driven by strong momentum, robust indirect taxes, and lower subsidies.
The high visibility of structural demand and healthier corporate and bank balance sheets was likely be the galvanising forces for growth going forward. The central bank said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.
With inputs from PTI