India's inflation trajectory is falling more favourably than expected, as per the RBI

India Inflation

The central bank said in its bulletin on Thursday that the price softening of various food items is anticipated to extend into the third quarter, reducing the positive price pressures on headline inflation originating from gasoline and core prices.The Reserve Bank of India (RBI) stated that “The trajectory of inflation is shifting down more favourably than anticipated.”

As pandemic scars heal and supply conditions are restored with productivity gains, a sustained easing of core inflation can be expected, which will reinforce the growth-supportive stance of monetary policy,” it added Since the middle of 2020, the central bank's monetary policy committee has kept interest rates at record lows, vowing to keep the policy accommodative until the economy improves on a long-term basis.As supply-side limitations lifted with the easing of pandemic-related restrictions,

India's retail inflation fell to a four-month low of 5.30 %.The monetary policy committee's choice to treat the May price shock as transitory was vindicated, according to the RBI. The central bank added, “The task now is to consolidate these gains and carry them forward into Q4 as well.” Exports have exceeded pre-pandemic levels, according to the RBI, and could help the economy grow faster. As per the latest data, India's merchandise exports increased about 46% in August to $33.46 billion, bring the number for the fiscal year to $164.10 billion.

The rate of export growth has actually accelerated during the pandemic, motivating an ambitious target of $400 billion in 2021/22 and $1 trillion in 2027-28, according to the report.The Reserve Bank of India also stated that imports were on the verge of trying to catch up, regardless of the fact that private consumption and fixed investment were still behind.The RBI stated that “The plateauing of infections and faster pace of vaccination is likely to hasten the convergence to pre-pandemic levels in various sectors.”

Source: Money Control

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