India’s journey towards achieving its 4 percent retail inflation target has encountered significant hurdles, primarily from persistent food inflation, as highlighted by Reserve Bank of India Governor Shaktikanta Das. Speaking at the ETNow Leadership Dialogues in Mumbai, Das emphasized the arduous nature of the disinflationary process, attributing it to stubbornly high food prices exacerbated by supply-side issues influenced by weather conditions.
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- Governor Das acknowledges resistance in achieving desired disinflation due to stubborn food inflation.
- Disinflation process faces challenges reminiscent of advanced economies, indicating a stubborn last mile.
- Uncertainties persist, with food inflation averaging around 8 per cent over the last seven months.
- Core inflation has notably decreased, reaching a historic low of 3 per cent in May.
- Retail inflation dipped to a one-year low of 4.75 per cent in May, despite elevated food inflation at 8.69 per cent.
- Wholesale Price Index (WPI) inflation surged to a 15-month high of 2.61 per cent in May, driven by rising food prices.
- Inflation for food articles hit a 10-month high of 9.82 per cent in May, with significant increases in vegetable, onion, and potato prices.
- Vegetable inflation rose to 32.42 per cent in May, while onion and potato inflation stood at 58.05 per cent and 64.05 per cent, respectively.
- Pulses inflation also increased to 21.95 per cent in May, further contributing to food inflation pressures.
- Analysts predict continued high food inflation due to severe heatwaves and the crucial role of monsoon progress in shaping future inflation trends.
