India is still facing the challenge of high prices, but there has been a decrease in retail inflation over the past two months, which brings some relief, as per the November bulletin of the Reserve Bank of India (RBI) published on Thursday.
The RBI mentioned that although the country is not yet in a completely comfortable position, the readings of around 5% and 4.9% in September and October, respectively, provide a welcome relief from the average of 6.7% in 2022-23 and 7.1% in July-August 2023.
While annual retail inflation in India dropped to a four-month low of 4.87% in October, it still remained higher than the RBI’s 4% target. The central bank expects inflation to average 5.4% in 2023-24.
The RBI stated that high-frequency food price data for this month up to Nov. 13 suggests that cereal and pulse prices have risen, while edible oil prices have continued to decline.
The central bank also highlighted that India’s economic growth is heavily reliant on domestic demand, offering protection against external shocks. It also mentioned that the country’s external sector remains strong, with a modest current account deficit and healthy foreign exchange reserves.
The RBI pointed out that India’s economic growth has shown an upward trend, with the GDP expected to increase in October-December due to enthusiastic festival demand. Investment demand also seems to be robust, supported by government infrastructure spending and a rise in private capex and digitization.
The RBI also stated that the calibrated normalization of surplus liquidity and strong credit growth have improved transmission during the current tightening phase, although the transmission process is still not fully complete. It noted that while rates have been effectively transmitted to term deposits, savings deposit rates have remained rigid.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
Waiting for response to load…
