RBI governor Shaktikanta Das has expressed his expectations of a slowdown in vegetable inflation from September onwards. The surge in tomato prices led to a spike in overall inflation, with food prices rising significantly. According to Das, price corrections are expected in August, primarily due to the softening of tomato prices. However, he called for supply side interventions to limit the impact and duration of price shocks. The governor mentioned that ongoing transmission of monetary policy has resulted in the easing of core inflation in recent months. However, headline inflation has been driven by the rise in tomato and other vegetable prices. The prospect of Kharif crops has improved due to the progress of the monsoon in July, although cumulative rainfall is still below average. Active supply-side interventions have brightened the outlook for cereal prices.
Nevertheless, Das also highlighted the uncertainty surrounding food prices, citing sudden weather events, El Nino conditions, and geopolitical tensions as factors. The frequent occurrence of food price shocks poses a risk to anchoring inflation expectations. Therefore, Das emphasized the criticality of continued and timely supply-side interventions to manage the severity and duration of such shocks in order to maintain price stability. To learn more about the governor’s views on the inflation outlook, click on the link.
