MUMBAI: The adverse impact of unprecedentedly high global food prices due to the ongoing geopolitical situation is visible in the domestic market as well, going further. inflationary pressure likely to continue, reserve Bank of India Governor Shaktikanta Daso said on Wednesday.
In an off-cycle Monetary Policy Committee (MPC) meeting during May 2-4, the Reserve Bank on Wednesday announced a hike in the key repo rate – at which it lends short-term money to banks – from 0.40 per cent to 4.40 per cent. percentage with immediate effect
However, the central bank has not tampered with inflation Announced the launch in April this year.
Das said the Reserve Bank of India’s (RBI) action should be viewed as “growth positive”, aimed at curbing inflation and supporting growth.
Retail inflation which has remained above RBI’s upper tolerance level of 6 per cent for the past three months and the ongoing Russia-Ukraine war has pushed inflation in commodities almost across the globe.
RBI has projected retail inflation to be 5.7 per cent in the current financial year.
Das said, “Faced with elevated inflationary pressures, which have shifted the future trajectory of inflation upward, we have announced our intention to engage in the return of housing to ensure that inflation targets Stay tuned.”
The Reserve Bank of India said consumer price index (CPI)-based retail inflation rose to around 7 per cent in March, mainly due to adverse spillover effects from unprecedented high global food prices.
Nine of the twelve food sub-groups registered an increase in inflation in March.
“High-frequency price indicators for April indicate a continuation of food price pressures. Also, the direct impact of the increase in domestic pump prices of petroleum products – from the second fortnight of March – is feeding into core inflation prints and It is expected to intensify in April,” Das said while reading out his statement.
Looking ahead, food inflation pressures are likely to continue, he added.
“Global wheat shortages are impacting domestic prices even as domestic supplies remain comfortable. Edible oil prices may further firm up due to export restrictions by major producing countries and reduction in sunflower oil production due to war. The increased feed costs are translating into increase in the prices of poultry, milk and dairy products,” he said.
Besides, international crude oil prices remained above USD 100 per barrel and this is giving rise to domestic pump prices.
The Governor further said that the risk of unprecedented input cost pressures in yet another round of price hikes for processed food, non-food manufactured products and services is now more powerful than before.
Das said, “This could strengthen corporate pricing power if margins are significantly reduced. In short, the strengthening of inflationary impulses coupled with the persistence of unfavorable global price shocks is the inflation trajectory presented in the April MPC proposal. creates an upward risk for the economy,” Das said.
He added that sustained high inflation inevitably hurts savings, investment, competition and production growth. This has adversely affected the poor section of the population by reducing their purchasing power.
“Therefore, I would like to emphasize that our monetary policy action today – aimed at moderating inflation and stabilizing inflation expectations – will strengthen and strengthen the economy’s medium-term growth prospects,” he said. They said.
Reiterating that the RBI remains steadfast in its commitment to control inflation and support growth, Das said inflation must be controlled to keep the Indian economy on its course for sustained and inclusive growth.
“The biggest contribution to overall macroeconomic and financial stability as well as sustainable development will come from our endeavor to maintain price stability,” he said.
In an off-cycle Monetary Policy Committee (MPC) meeting during May 2-4, the Reserve Bank on Wednesday announced a hike in the key repo rate – at which it lends short-term money to banks – from 0.40 per cent to 4.40 per cent. percentage with immediate effect
However, the central bank has not tampered with inflation Announced the launch in April this year.
Das said the Reserve Bank of India’s (RBI) action should be viewed as “growth positive”, aimed at curbing inflation and supporting growth.
Retail inflation which has remained above RBI’s upper tolerance level of 6 per cent for the past three months and the ongoing Russia-Ukraine war has pushed inflation in commodities almost across the globe.
RBI has projected retail inflation to be 5.7 per cent in the current financial year.
Das said, “Faced with elevated inflationary pressures, which have shifted the future trajectory of inflation upward, we have announced our intention to engage in the return of housing to ensure that inflation targets Stay tuned.”
The Reserve Bank of India said consumer price index (CPI)-based retail inflation rose to around 7 per cent in March, mainly due to adverse spillover effects from unprecedented high global food prices.
Nine of the twelve food sub-groups registered an increase in inflation in March.
“High-frequency price indicators for April indicate a continuation of food price pressures. Also, the direct impact of the increase in domestic pump prices of petroleum products – from the second fortnight of March – is feeding into core inflation prints and It is expected to intensify in April,” Das said while reading out his statement.
Looking ahead, food inflation pressures are likely to continue, he added.
“Global wheat shortages are impacting domestic prices even as domestic supplies remain comfortable. Edible oil prices may further firm up due to export restrictions by major producing countries and reduction in sunflower oil production due to war. The increased feed costs are translating into increase in the prices of poultry, milk and dairy products,” he said.
Besides, international crude oil prices remained above USD 100 per barrel and this is giving rise to domestic pump prices.
The Governor further said that the risk of unprecedented input cost pressures in yet another round of price hikes for processed food, non-food manufactured products and services is now more powerful than before.
Das said, “This could strengthen corporate pricing power if margins are significantly reduced. In short, the strengthening of inflationary impulses coupled with the persistence of unfavorable global price shocks is the inflation trajectory presented in the April MPC proposal. creates an upward risk for the economy,” Das said.
He added that sustained high inflation inevitably hurts savings, investment, competition and production growth. This has adversely affected the poor section of the population by reducing their purchasing power.
“Therefore, I would like to emphasize that our monetary policy action today – aimed at moderating inflation and stabilizing inflation expectations – will strengthen and strengthen the economy’s medium-term growth prospects,” he said. They said.
Reiterating that the RBI remains steadfast in its commitment to control inflation and support growth, Das said inflation must be controlled to keep the Indian economy on its course for sustained and inclusive growth.
“The biggest contribution to overall macroeconomic and financial stability as well as sustainable development will come from our endeavor to maintain price stability,” he said.