RBI MPC Minutes: Food inflation pressures showing little signs of abatement, warns RBI
Monetary Policy Committee (MPC) meeting on Friday, highlighting that the headline inflation has seen upward movement in June to 5.1 per cent, as food inflation pressures increased and offset the impact of subdued core (CPI excluding food and fuel) inflation and deflation in the fuel group.
On future indicators, the central bank said in its statement that headline inflation in July and Q2 of the current financial year are expected to be lower, given their base effect advantage; but with food inflation pressures showing little signs of abatement in the near-term, and household inflation expectations picking up, monetary policy has to remain vigilant to potential spillovers of food price pressures to the core components.
«This is critical for the ‘last mile of disinflation’ and anchoring of inflation expectations. Food inflation may soften due to good monsoon, steady improvement in kharif sowing, rising reservoir levels and a likely favourable rabi season output. Uncertainty, however, comes from frequent recurrence of adverse weather events, resurgence of geo-political tensions and financial market volatility. Further, core inflation might just have bottomed out,» the statement read further.
Here are the key highlights:
RBI Governor Shaktikanta Das noted that the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to withdrawal of accommodation has facilitated gradual disinflation over 2022-23. With a forecast of 4.5 per cent headline inflation for 2024-25, the
