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MUMBAI: The RBI has said that the fight against inflation is far from over, and the monetary policy has to stay the course on “the arduous last leg of the journey to align inflation with the target”.
The central bank in its ‘state of the economy’ report said that the spike in food prices, typical of the onset of the monsoon, corroborates its hawkish stance. The RBI’s comments come at a time when rising food prices have pushed retail inflation to 4. 8% in June, which has ended hopes of a rate cut.
“Spillovers from tomato price spikes to that of other commodities and unhinging inflation expectations remain a major concern,” the report said. The RBI said spikes in price spells over the years call for improving the supply chains to contain overall inflation volatility.
Despite the spike in inflation, the RBI is positive about the economy. “The Indian economy is poised to be the fastest growing major economy in the world despite some sequential moderation in economic activity inJune,” the RBI said.
The report also forecasts a significant increase in domestic savings, driven by a surge in employment opportunities. The report suggests that the country’s labour force is expected to account for one percentage point of India’s GDP. Increasing worker productivity is identified as the primary driver of sustained economic growth. Furthermore, this demographic advantage is also expected to boost investment levels. India’s savings rate is predicted to rise with increased employment opportunities.
The central bank in its ‘state of the economy’ report said that the spike in food prices, typical of the onset of the monsoon, corroborates its hawkish stance. The RBI’s comments come at a time when rising food prices have pushed retail inflation to 4. 8% in June, which has ended hopes of a rate cut.
“Spillovers from tomato price spikes to that of other commodities and unhinging inflation expectations remain a major concern,” the report said. The RBI said spikes in price spells over the years call for improving the supply chains to contain overall inflation volatility.
Despite the spike in inflation, the RBI is positive about the economy. “The Indian economy is poised to be the fastest growing major economy in the world despite some sequential moderation in economic activity inJune,” the RBI said.
The report also forecasts a significant increase in domestic savings, driven by a surge in employment opportunities. The report suggests that the country’s labour force is expected to account for one percentage point of India’s GDP. Increasing worker productivity is identified as the primary driver of sustained economic growth. Furthermore, this demographic advantage is also expected to boost investment levels. India’s savings rate is predicted to rise with increased employment opportunities.
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