Growth momentum quickens, food inflation a concern: RBI bulletin

Mumbai, July 18

The second quarter of 2024-25 has begun with signs of quickening momentum in the economy though inflation in the food basket remains a concern, said the Reserve Bank’s July Bulletin released on Thursday.

An article on ‘State of the Economy’ in the monthly Bulletin also said the improvement in the outlook for agriculture and the revival of rural spending have turned out to be the bright spots in the evolution of demand conditions.

Consumer price inflation ticked up in June 2024 after three consecutive months of moderation as a broad flare-up in vegetable prices halted the overall disinflation that had been underway, it said.

“The argument that food price shocks are transitory does not seem to be borne out by the actual experience over the past one year – too long a period for a shock to be termed as transitory!” said the article authored by a team led by RBI deputy governor Michael Debabrata Patra.

Superimposed on this ‘persistent’ component are sporadic spikes in prices of a range of vegetables that overlap across constituents to give the broader category of vegetable inflation an enduring character.

Food prices are clearly dominating the behaviour of headline inflation and households’ inflation expectations, undermining the gains of lowering core and fuel inflation through a combination of monetary policy and supply management, they said.

The central bank, however, said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.