Inflation to ease to 4.6% in first three quarters 2024-25: RBI.

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Inflation to ease to 4.6% in first three quarters 2024-25: RBI'

RBI Forecasts: Inflation Outlook and Global Factors

In its December 2023 bulletin, the Reserve Bank of India (RBI) anticipates a moderation in inflation, projecting a decline to 4.6% during the initial three quarters of the fiscal year 2024-25 (FY25). This follows India's recent retail inflation report for November, which stood at a three-month high of 5.6%. The RBI attributes the surge to recurring spikes in food prices, disrupting the brief relief experienced in September and October.




Global Commodity Prices and Food Inflation Concerns

While global commodity prices, especially in agriculture, have witnessed a softening trend, the RBI points out exceptions, highlighting rice. The bulletin emphasizes that the near-term inflation outlook will be influenced by uncertain food prices. High-frequency indicators indicate potential increases in key vegetable prices, posing a short-term risk to Consumer Price Index (CPI) inflation. The ongoing rabi sowing progress for essential crops demands close monitoring, with global sugar prices identified as a cause for concern.

Inflation Projections and Monetary Policy Committee (MPC) Alignment

For the fiscal year 2023-24, the RBI aligns its inflation projection with the Monetary Policy Committee's announcement, foreseeing inflation at 5.4%. Further detailed projections include 5.2% for Q1FY25, 4.0% for Q2, and 4.7% for Q3. The bulletin underscores a balanced risk assessment. Additionally, the bulletin addresses the low probability of stagflation in India, indicating only a 1% risk based on data until Q2FY24.

Global Growth Concerns and India's GDP Projections

The bulletin sheds light on the fragile state of global growth, forecasting a potential slowdown in 2024. Turning attention to India's Gross Domestic Product (GDP) growth, the RBI projects a real growth rate of 7% for 2023-24, with specific quarterly projections. Q3 is expected at 6.5%, Q4 at 6.0%, while Q1:2024-25 is projected at 6.7%, Q2 at 6.5%, and Q3 at 6.4%.

Disclaimer: This article is pure understanding of Gyaanleikh Team, and we don't allow you to rely on the same. 








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