Retail Inflation Expected To Average Above 6% In July-September Quarter, Says RBI
High-frequency data for August so far show that prices of cereals, pulses and tomatoes continue to rise.
India's retail inflation is expected to average well above 6% in the second quarter ending September on higher food prices, according to the Reserve Bank of India.
The uptick in inflation in June mutated in July, with the unprecedented shock to tomato prices spilling over to other vegetables, the central bank in its monthly bulletin for August 2023. While the core inflation witnessed a moderation, headline inflation is likely to stay above the RBI's tolerance zone, it said.
High-frequency food price data for August so far (up to 14th) show that prices of cereals and pulses continued to increase, according to an analysis by the RBI. Edible oil prices continued to decline in July-August. Tomato prices, on an average, registered a further increase, although more recent data indicate some pullback in prices, it said. Onion and potato prices also registered sequential upticks, the central bank said.
"Our economic activity index nowcasts GDP growth for Q1 2023-24 at 7.8%," it said.
In its July 2023 update, the IMF revised India’s growth upwards to 6.1% for 2023-24. "We maintain our view that this projection may be surprised on the upside even with this upgrade," the central bank said.
Other Highlights:
Domestic drivers such as private consumption and fixed investment are offsetting the drag from the contraction in exports.
High-frequency indicators for the services sector showed resilience in overall economic activity in July 2023
As on Aug. 11, 2023, 89.8% of the full season normal area for kharif crops has been sown, aided by considerable progress of rice sowing (which alone accounts for 37% of the total normal area) in July.
Deficient rainfall in eastern and northeastern states, that account for approximately 29% of the total kharif rice sown area, has kept overall sown area under rice below normal.
