Inflation targeting remains work in progress as long as food price pressures persist: RBI Bulletin

Reserve Bank of India

The Reserve Bank of India’s (RBI) latest monthly bulletin on June 19 said the goal of aligning inflation with the target of 4 percent will remain work in progress as long as food prices pressure persists.

“As long as food price pressures persist, however, the goal of aligning inflation with its target remains a work in progress,” the RBI's monthly State of the Economy article said.

The central bank has set an inflation target of 4 percent, with a leeway of 2 percentage point on either side.

The monthly State of the Economy article includes Deputy Governor Michael Patra - one of the three RBI representatives on the Monetary Policy Committee (MPC) - as one of its co-authors. The views expressed in the article do not reflect the central bank's official stance, RBI said in a release.

India’s headline retail inflation eased to the lowest in a year at 4.75 percent in May 2024, data released by the statistics and programme implementation ministry on June 12 showed.

The Consumer Price Index (CPI) inflation in April was at 4.83 percent.

The central bank said this 8 basis points (bps) softening in inflation came from a favourable base effect of 56 bps more than offsetting a positive momentum of 48 bps on account of an month-on-month increase of 68 bps in food, 80 bps in fuel and 24 bps in the core group (i.e., excluding food and fuel).

Food inflation (y-o-y) remained unchanged at 7.9 per cent in May. In terms of sub-groups, inflation edged up in respect of cereals, egg, fruits and pulses while meat and fish, milk, sugar, spices, nonalcoholic beverages and prepared meals witnessed a moderation in inflation,, Bulletin said.

Vegetable prices recorded a double digit y-o-y inflation for the seventh consecutive month.

Core inflation eased further to 3.0 per cent in May from 3.2 per cent in April, the lowest in the current CPI (2012=100) series, with 7 out of 9 sub-groups registered a softening, RBI bulletin said.