Vegetable prices in India have begun to fall and are projected to decline from September, Reuters quoted the Reserve Bank of India (RBI) Governor Shaktikanta Das as saying on Wednesday.
The skyrocketing prices of vegetables and grains have caused retail inflation to soar to 7.44 per cent in July, its highest level in 15 months.
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“We expect to see an appreciable slowdown in vegetable inflation from September,” Das said.
Although the possibility that global tensions could negatively influence food prices, he said the forecast for grain prices is positive.
The gradual decrease in core inflation over the past few months, according to Das, is a sign of monetary policy transmission despite core inflation being elevated.
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According to him, the central bank would be vigilant to prevent persistent inflation from spreading to other market segments.
“The frequent incidences of recurring food price shocks pose a risk to anchoring of inflation expectations, which has been underway since September 2022. We will remain watchful of this,” Das said.
Since May 2022, India has increased interest rates by a total of 250 basis points to control inflation. According to Das, the Monetary Policy Committee’s legislated medium-term aim of 4 per cent inflation is still the central bank’s primary goal.
He asserted that the foundation of sustained growth must be price stability and added that the circumstances are ideal for the growth to continue and the capex cycle to pick up steam in 2023–2024.
The RBI chief reaffirmed that there is no set aim for the rupee but that the RBI will keep increasing its foreign exchange reserves to help control any dollar outflows.
“The Reserve Bank has also made conscious efforts to improve systemic resilience and efficiency by maintaining external stability and building forex reserves,” he said.
(With inputs from Reuters)
