Inflation in India is expected to have eased in August due to lower vegetable prices, but it is likely to remain above the Reserve Bank of India s target range for the second consecutive month. Erratic monsoon rains have damaged crops, leading the government to subsidize vegetable prices and ban cereal exports. While this has helped bring down food inflation, rising energy prices may limit the decline. Economists predict that the consumer price index rose 7.00% in August compared to a year ago, with inflation expected to remain above the target range until October.
He further said the RBI monetary policy has to be forward-looking, which should be adopting a policy approach looking only at the rear-view mirror can lead to accidents.
Popular Indian and foreign brands including shoe retailers Japan's Asics and Skechers USA have been offering steep discounts, some as much as 70 per cent, far bigger than normal and have also been extending their sale periods, said several store managers.
A member of India s Monetary Policy Committee (MPC) predicts that retail inflation will return to the central bank s comfort band of 2%-6% as vegetable prices soften. The recent spike in vegetable prices, particularly tomatoes, has been unprecedented, but a seasonal softening is expected. Led by vegetables, food inflation reached an over 3-year high of 11.5% in July, pushing retail inflation to 7.44% above the RBI s comfort band.
Reserve Bank of India Governor Shaktikanta Das stated that while core inflation in India remains elevated, the prices of vegetables could start to decrease next month as fresh crops arrive. This could potentially lead to a slowdown in vegetable inflation from September. Das also mentioned that the steady easing of core inflation indicates that the tight monetary policy is working. The Monetary Policy Committee has decided to hold rates and maintain its focus on withdrawing accommodation.