Headline inflation to exceed 6% in September quarter, says RBI Bulletin
RBI). The August 2023 bulletin was published by the central bank on Thursday. The unprecedented shock to tomato prices spread to the pricing of other vegetables, according to the RBI, which caused the increase in inflation from its June reading to change in July.
“Headline inflation, after reaching a low of 4.3 percent in May 2023, rose in June and is expected to surge during July-August led by vegetable prices. While the vegetable price shock may reverse quickly, possible El Niño weather conditions along with global food prices need to be watched closely against thebackdrop of a skewed south-west monsoon so far," RBI Governor, Shaktikanta Das in the bulletin. The central bank also noted that despite a strong first quarter, the global recovery is sluggish due to weaker industrial production and trade.
In the second quarter of 2023–2024, the Indian economy is starting to pick up steam in this challenging global environment. Private consumption and fixed investment are domestic drivers that are balancing the drag from the decline in exports. The surge in vegetable costs, driven by tomatoes, will put significant upward pressure on the near-term inflation trajectory in the months to come, according to RBI Bulletin August 2023.
But with new market entrants, this increase is probably going to level out. "There has been significant improvement in the progress of the monsoon and kharif sowing in July; however, the impact of the uneven rainfall distribution warrants careful monitoring. Crude oil prices have firmed up amidst production cuts.
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