Rising Food Prices Worry Reserve Bank of India
The Reserve Bank of India (RBI) has raised concerns about the ongoing high food prices, stating that the prolonged period of elevated food inflation cannot be considered temporary. In its July bulletin, the RBI noted that food price shocks have persisted for too long to be deemed transitory.
In June 2024, food inflation almost doubled to 8.36% compared to 4.63% in June 2023. The overall retail inflation rate also increased to 5.08% in June 2024, up from 5.7% in December of the previous year. The RBI has maintained the repo rate, the interest rate at which it lends to other banks, to control inflation. However, rising food prices continue to challenge efforts to bring inflation down to the 4% target.
The RBI’s next monetary policy meeting is scheduled for early August. The central bank remains committed to aligning inflation with the target, but acknowledges that recent declines in inflation readings indicate that more work is needed.
Doubts Revealed
Reserve Bank of India (RBI) -: The Reserve Bank of India (RBI) is the central bank of India. It manages the country’s money and financial system, like how a school principal manages a school.
food inflation -: Food inflation means the prices of food items are increasing. It’s like when the cost of your favorite snacks keeps going up.
repo rate -: The repo rate is the interest rate at which the RBI lends money to banks. It’s like when you borrow money from your parents and they charge you a small fee.
retail inflation rate -: The retail inflation rate measures how much the prices of goods and services bought by people have increased. It’s like checking how much more you have to pay for the same things you bought last year.
monetary policy meeting -: A monetary policy meeting is when the RBI officials gather to decide on actions to control the money supply and interest rates in the country. It’s like a team meeting to plan how to manage the school’s budget.
