Vegetable prices to ease by September, RBI keeping close vigil on inflation: Governor Shaktikanta Das
vegetable prices that caused an alarming spike in the latest monthly consumer inflation assessment should start easing next month following the arrival of fresh crops and join the broad directional trend on core inflation, Reserve Bank of India Governor Shaktikanta Das said Wednesday, but higher-than-mandated prints for the price gauge have lengthened the odds on a rate cut through the latter half of FY24.
«On the positive side, inflation excluding food and fuel (core inflation) has softened by around 130 basis points from its recent peak. Although it is still elevated at 4.9 per cent, this steady easing of core inflation indicates tight monetary policy is working,” Governor Das said while delivering the Lalit Doshi Memorial Lecture in Mumbai.
‘’The spike in vegetable prices in July is starting to see a correction, led by tomato prices. New arrivals of tomatoes in mandis are already softening prices.
We expect to see an appreciable slowdown in vegetable inflation from September.’’
India is facing a fresh bout of inflationary pressures, led by food items. Prices of tomatoes have soared in recent months pushing inflation readings to multi year highs.
Gains in prices of onions in the past few days is adding fuel to the inflation fire.
The Monetary Policy Committee in its meeting earlier this month held rates and monetary stance remained at focusing on withdrawal of accommodation. It also raised the inflation forecast for the fiscal year to 5.4 percent from 5.1 percent that it forecast earlier.
“Given the likely short- term nature of the vegetable price shocks, monetary policy can await the dissipation of the first-round effects of such shocks that may produce short-lived spikes in headline inflation.
