• UGI USER
  • Jun 19, 2024
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DISINFLATION FACING RESISTANCE FROM STUBBORN FOOD INFLATION :RBI GOVERNOR

Why in News ?

The Reserve Bank of India’s (RBI) concerns about persistent food inflation affecting the overall disinflation process and outlines the RBI’s strategies and economic projections.

About the News

  • Slow Disinflation:RBI Governor Shaktikanta Das highlighted that while overall inflation is easing, the pace is slow due to high food inflation driven by supply-side factors affected by weather conditions.
  • Current Inflation Rates:In May, retail inflation dropped to 4.75%, a one-year low, but food inflation remained high at 7.9%.
  • The RBI’s Monetary Policy Committee kept the repo rate unchanged at 6.5% due to concerns over food inflation.
  • Future Projections:
  • The RBI projects consumer price-based inflation (CPI) to be 4.5% for FY25, with quarterly estimates varying between 3.8% and 4.9%.
  • Policy Stance:Governor Das stated that changing the policy stance would be premature without clear evidence of faster inflation moderation, advocating for a cautious approach.
  • Economic Growth:The RBI revised its GDP growth forecast for FY25 to 7.2%, citing strong economic momentum, improved rural demand, and a better external sector.
  • Rural consumption is expected to stay strong, supported by increased FMCG sales and optimistic agricultural projections due to a favorable monsoon.