RBI Governor Shaktikanta Das Predicts Lower Inflation and Steady GDP Growth
RBI Governor Shaktikanta Das announced that inflation is expected to moderate from July onwards due to improved monsoon and easing global food prices. He projected CPI inflation for 2024-25 to range between 4.3% and 4.7%, and real GDP growth at 7.2%.
Inflation Projections
Das stated, “Global food prices showed signs of easing in the month of July after registering an increase since March 2024.” He added that the CPI inflation for the first quarter of the next financial year (Q1 2025-26) is projected at 4.4%.
Economic Growth
Das outlined the economic growth with real GDP growth of 7.2% for the fiscal year 2024-25. He mentioned that the growth projection for the first quarter of the current financial year has been slightly moderated due to updated information on high-frequency indicators.
Inflation Landscape
Das noted that headline inflation eased to 5.1% in June 2024 due to higher than expected food inflation. Fuel prices remained in deflation for the tenth consecutive month, and core inflation moderated to a historic low in May and June.
Food Inflation
Food inflation, which has a significant weight in the CPI basket, contributed to more than 75% of headline inflation in May and June. Vegetable prices increased sharply, contributing about 35% to inflation in June. However, relief is expected from the pickup in the southwest monsoon and healthy progress in Kharif sowing.
Conclusion
Das anticipates some relief in food inflation due to the expected pickup in the southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals remain above the normative levels, contributing to a more stable food price environment.
Doubts Revealed
RBI -: RBI stands for Reserve Bank of India. It is the central bank of India, which means it manages the country’s money and financial system.
Governor -: The Governor of the RBI is the person in charge of the Reserve Bank of India. Right now, that person is Shaktikanta Das.
Shaktikanta Das -: Shaktikanta Das is the current Governor of the Reserve Bank of India. He helps make important decisions about India’s money and economy.
Inflation -: Inflation is when the prices of things we buy, like food and clothes, go up over time. It means you need more money to buy the same things.
GDP -: GDP stands for Gross Domestic Product. It is the total value of all goods and services produced in a country. It helps us understand how well the economy is doing.
CPI -: CPI stands for Consumer Price Index. It measures the average change in prices over time that consumers pay for a basket of goods and services.
Monsoon -: Monsoon is the rainy season in India, which usually happens from June to September. It is very important for farming and water supply.
Kharif sowing -: Kharif sowing refers to planting crops during the monsoon season. These crops, like rice and maize, are harvested in the autumn.
Core inflation -: Core inflation is the change in the cost of goods and services but does not include food and energy prices because they can be very volatile.
Deflation -: Deflation is when the prices of goods and services go down over time. It is the opposite of inflation.