MUMBAI: RBI governor Shaktikanta Das has mentioned there will probably be a slowdown in vegetable inflation from September, with the July spike correcting in August, led by tomato costs. The governor, nonetheless, known as for supply side interventions to restrict the impression and length of worth shocks.
“The July print, which was released after the monetary policy committee meeting, was on the higher side compared to our estimates. Prices of vegetables surged by 37.3% (year-on-year), led by an increase of 201.5% in tomato prices. Reflecting these drivers, food group inflation more than doubled from 4.7% in June to 10.6% in July,” Das mentioned within the Lalit Doshi Memorial lecture in Mumbai.
After reaching a low of 4.3% in May 2023, headline inflation has risen to 7.4% in July pushed by the surge in tomato and different vegetable costs. Most analysts are actually forecasting that charges won’t drop till subsequent 12 months.
“On the positive side, inflation excluding food and fuel (core inflation) has softened by around 130 basis points from its peak in January 2023. Although it is still elevated at 4.9%, this steady easing of core inflation over the last five months is indicative of the ongoing transmission of monetary policy,” mentioned Das.
He mentioned new arrivals of tomatoes in mandis are already softening costs, coupled with proactive supply administration within the case of onions. Das mentioned the prospects for Kharif crops have improved, too, thanks to the progress of the monsoon in July, though cumulative rainfall has once more moved into the deficit territory. The outlook for cereal costs has brightened, supported by lively supply-side interventions.
“Sudden weather events, El Nino conditions and renewed geopolitical tensions, however, impart uncertainty to the food prices outlook,” the governor mentioned. Das cautioned that frequent incidences of recurring meals worth shocks pose a threat to anchoring inflation expectations, which have been beneath manner since September 2022. “The role of continued and timely supply-side interventions assumes criticality in limiting the severity and duration of such shocks,” the governor mentioned.
“The July print, which was released after the monetary policy committee meeting, was on the higher side compared to our estimates. Prices of vegetables surged by 37.3% (year-on-year), led by an increase of 201.5% in tomato prices. Reflecting these drivers, food group inflation more than doubled from 4.7% in June to 10.6% in July,” Das mentioned within the Lalit Doshi Memorial lecture in Mumbai.
After reaching a low of 4.3% in May 2023, headline inflation has risen to 7.4% in July pushed by the surge in tomato and different vegetable costs. Most analysts are actually forecasting that charges won’t drop till subsequent 12 months.
“On the positive side, inflation excluding food and fuel (core inflation) has softened by around 130 basis points from its peak in January 2023. Although it is still elevated at 4.9%, this steady easing of core inflation over the last five months is indicative of the ongoing transmission of monetary policy,” mentioned Das.
He mentioned new arrivals of tomatoes in mandis are already softening costs, coupled with proactive supply administration within the case of onions. Das mentioned the prospects for Kharif crops have improved, too, thanks to the progress of the monsoon in July, though cumulative rainfall has once more moved into the deficit territory. The outlook for cereal costs has brightened, supported by lively supply-side interventions.
“Sudden weather events, El Nino conditions and renewed geopolitical tensions, however, impart uncertainty to the food prices outlook,” the governor mentioned. Das cautioned that frequent incidences of recurring meals worth shocks pose a threat to anchoring inflation expectations, which have been beneath manner since September 2022. “The role of continued and timely supply-side interventions assumes criticality in limiting the severity and duration of such shocks,” the governor mentioned.
