Poor monsoon can spike food inflation; can it push RBI to hike rates?
1 year, 3 months ago

Poor monsoon can spike food inflation; can it push RBI to hike rates?

Live Mint  

Monsoon this year to expected to remain weak because of the El Nino phenomenon. India's consumer price index inflation, or retail inflation, surged sharply to a 15-month high peak of 7.44 per cent in July 2023, driven by high food and vegetable prices. Hajra, however, added that the impact of a suboptimal monsoon on inflation can be substantial as food products account for nearly 50 per cent of the retail inflation basket. Some hit to production in the previous year, weather anomalies in the current monsoon season and global shortages are all adding upside risks to food prices, said Deshpande, adding that most of these crops that are facing high food inflation are majorly produced in the kharif season between June and October. "For the near term, we see headline inflation below 6 per cent by October and expect it to average 5.4 per cent in the year, with the second half of FY24, undershooting RBI's estimates.

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History of this topic

Food Inflation To Calm Down In Next Few Months, Says Finance Ministry’s Report
4 weeks, 1 day ago

Food Inflation To Calm Down In Next Few Months, Says Finance Ministry’s Report

ABP News  

The finance ministry in its latest economic review for October revealed that food inflation is expected to slowdown in the upcoming months. “Supply disruptions from heavy rains in major producing states contributed to price pressures in tomatoes, onions, and potatoes, while elevated global prices drove up oil and fat inflation,” the ministry in the review stated. The report, released by …

Why inflation will keep policymakers guessing, impact festive spending
1 year, 3 months ago

Why inflation will keep policymakers guessing, impact festive spending

India Today  

Offering some relief to consumers, inflation cooled down in August due to easing of food prices, compared to the 15-month high in July. Consumer Price Index -based inflation softened to 6.8 per cent in August, after surging to 7.4 per cent the previous month. Inflation in all commonly constructed non-food CPI categories remained low and unchanged from July: non-food CPI …

RBI becomes cautious of surging food prices
1 year, 3 months ago

RBI becomes cautious of surging food prices

Deccan Chronicle  

The Reserve Bank of India must ensure there’s no spillover from the surge in food prices, two monetary policymakers said, as the odds for a rate hike begin to build with inflation at a 15-month high. “The key would be to control food inflation itself,” said Shashanka Bhide, who is one of the six members of the monetary policy committee. …

India should brace for a food inflation spike
1 year, 4 months ago

India should brace for a food inflation spike

Hindustan Times  

Most analysts expect India’s benchmark inflation measure, as measured by the Consumer Price Index to breach the 6% threshold in July. In July, tomatoes have played a big role, continuing to sell at very high prices, with signs that onions could generate additional tailwinds for food inflation. While price pressures from perishables such as onions and tomatoes will eventually die …

Inflation Under RBI Limit: What MPC Expects To Do In June Monetary Policy?
1 year, 7 months ago

Inflation Under RBI Limit: What MPC Expects To Do In June Monetary Policy?

News 18  

India’s CPI inflation in April has come near the RBI’s 4 per cent target and is well within the central bank’s upper tolerance limit of 6 per cent for the second consecutive month. Suvodeep Rakshit, senior economist of, Kotak Institutional Equities, said, “We continue to pencil in the repo rate to remain unchanged for an extended period, subject to global …

Rural demand recovery may drive next bout of inflation in India, say economists
1 year, 10 months ago

Rural demand recovery may drive next bout of inflation in India, say economists

India Today  

The Indian economy could see another bout of inflation as the rural demand revives and the informal sector recovers from the pandemic-lows, economists at HSBC Securities and Capital Markets said. While rural demand was weak in the early part of last year, wage growth, adjusted for inflation, has now surpassed pre-pandemic levels, HSBC's research showed. "Even if the winter crop …

Tackling a rise in inflation
2 years, 2 months ago

Tackling a rise in inflation

Hindustan Times  

Is inflation the biggest problem the Indian economy faces at the moment? To be sure, the latest retail inflation number was in line with analyst estimates, and a rate hike in the December meeting of RBI’s monetary policy committee is almost a given even in any case. Second, although a moderation in international commodity prices has provided some respite on …

Explainer: India’s economic outlook at the mercy of monsoon
2 years, 4 months ago

Explainer: India’s economic outlook at the mercy of monsoon

Live Mint  

The monsoon, which accounts for about 75% of India's annual rainfall, is the lifeblood of its nearly $3 trillion agriculture-dependent economy. Asia's third-largest economy and the world's top producer of a host of critical crops such as rice, wheat and sugar has received 11% more than average monsoon rain since the four-month season began on June 1. Any protectionist measure …

RBI raises inflation forecast to 6.7% for 2022-2023
2 years, 6 months ago

RBI raises inflation forecast to 6.7% for 2022-2023

India TV News  

Highlights RBI today upped inflation projection for current fiscal to 6.7% from 5.7% forecast in April RBI Governor Shaktikanta Das said the upside risk to inflation persists High global crude oil prices would add to the upside pressure on inflation RBI inflation news updates : Reserve Bank of India on Wednesday upped inflation projection for the current fiscal to 6.7 …

RBI not ‘behind the curve’ in hiking rate; never wise to overreact to shocks: Ashima Goyal
2 years, 7 months ago

RBI not ‘behind the curve’ in hiking rate; never wise to overreact to shocks: Ashima Goyal

The Hindu  

The Reserve Bank of India is not “behind the curve” in hiking interest rate to tackle rising inflation, Monetary Policy Committee member Ashima Goyal said on Sunday and asserted that it is never wise to overreact to shocks when the economic recovery is shaky post the coronavirus pandemic. While acknowledging that India is “especially vulnerable” to the combination of food …

RBI hints at end to low interest regime in June
2 years, 8 months ago

RBI hints at end to low interest regime in June

Deccan Chronicle  

Mumbai: While a repo rate hike in June looks imminent, the Reserve Bank of India’s rate-setting panel would not be as aggressive as the US Federal Reserve in hiking rates, if one goes by the minutes of the April 6-8 monetary policy meeting. The central bank will have to constantly re-assess the “dynamic and fast-changing situation” and tailor its actions …

High Inflation Drives Bond Yields to 3-Year Peak; Will This Prompt RBI to Hike Rates?
2 years, 8 months ago

High Inflation Drives Bond Yields to 3-Year Peak; Will This Prompt RBI to Hike Rates?

News 18  

Bond yields continued their northward journey, as they surged further to hit a near three-year high after the consumer price inflation data showed a faster acceleration than economists had estimated. We revise our CPI forecast to 5.8 per cent for FY23, and now expect four 25-bp rate hikes from the RBI in FY23, starting from the June MPC meeting,” said …

How the deficient monsoon could dent the economic recovery
3 years, 4 months ago

How the deficient monsoon could dent the economic recovery

India Today  

Even as India recovers from the devastating second wave of Covid-19 cases and the economy shows signs of normalisation, a new crisis awaits the government and the Indian economy. Nearly half of India’s farmland has no irrigation and is dependent on monsoon rains, which account for 70-90 per cent of annual rainfall. Rainfall data and projections for June-September show deficient …

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