INSUBCONTINENT EXCLUSIVE:
Shaktikanta Das, Shaktikanta, RBI Governor4 min read Last Updated : Oct 09 2024 | 11:25 AM ISTRBI on CPI inflation, inflation forecast
India: Even as the Reserve Bank of India (RBI) has changed its monetary policy stance to 'neutral' from 'withdrawal of accommodation', it
remains mindful of the risks to inflation in the months ahead
It has highlighted adverse weather conditions, ongoing geopolitical conflicts, and a rise in select commodities as the key threats to its
inflation forecast.
The inflation horse, RBI Governor Shaktikanta Das said, has been brought to the stable, and has to be kept on a leash
flexibility, by changing the stance to neutral, in line with our expectations
This has opened the door for a potential rate cut in December 2024, if the lurking risks to inflation, both domestic and global, do not
In our view, the Indian rate cut cycle will be fairly shallow, restricted to 50 basis points (bps) over two policy reviews," said Aditi
Nayar, chief economist and head of Research and Outreach at ICRA.
Headline consumer price index (CPI) inflation, meanwhile, moderated to
4.4 per cent in April-August 2024 from 5.2 per cent in H2-CY24
Core inflation dipped to its lowest level of 3.1 per cent in the current series (since January 2012), the RBI said, before increasing in
2024), and contributing 72.5 per cent of headline inflation during the period.
While the September inflation print may see a significant
pick-up as base effects turn adverse and food prices register an upturn, food inflation, the RBI said, is expected to ease by Q4:2024-25 on
better kharif arrivals and rising prospects of a good Rabi season.
The RBI has cut its CPI inflation forecast for the first quarter of
fiscal year 2025-26 (Q1-FY26) to 4.3 per cent from 4.4 earlier
CPI inflation for 2024-25 is projected at 4.5 per cent with Q2 at 4.1 per cent; Q3 at 4.8 per cent; and Q4 at 4.2 per cent.Food inflation
outlook
Experts see the food inflation to remain balanced in the months ahead
Late monsoon withdrawal (vegetables) and government policies (edible oil) though are upside risks, analysts at Nomura cautioned, but
the interests of food consumers and food producers
Too low food prices are also a negative for farmers," wrote Sonal Varma, chief economist for India and Asia ex-Japan at Nomura in a recent
note co-authored with Aurodeep Nandi.
Food inflation momentum, particularly after excluding the volatile vegetables components, eased again
in September, but recent government interventions such as its reconsideration of export bans on rice and higher import tariffs on edible
oils are aimed at stemming excessive food price declines.Crude oil prices a concern
At the global level, the developing geopolitical crisis
fortnight ago, translating into a sharp rise of around 18 per cent
However, analysts will have to see what an Iranian response to such attacks would be
If, in response, Iran were to target energy infrastructure in neighboring states or supply routes such as the Strait of Hormuz, crude prices
Oct 09 2024 | 11:25 AMIST
