Headline inflation begining to show signs of easing says RBI

The RBI stated in a latest update that the outlook for the global economy remains clouded with downside risks. Global financial conditions have been tightening and deteriorating market liquidity is amplifying financial price movements. Markets are now pricing in moderate increases in policy rates and risk-on appetite has returned. In India, supply responses in the economy are gaining strength. With headline inflation begining to show signs of easing, the domestic macroeconomic outlook can best be characterised as resilient but sensitive to formidable global headwinds. Urban demand appears robust, rural demand is muted but more recently picking up traction.

For India, the macroeconomic outlook can best be characterized as resilient but sensitive to formidable global headwinds. The real GDP growth in Q2 has been pegged between 6.1 and 6.3 per cent. If this is realised, India is on course for a growth rate of about 7 per cent in 2022-23. In Q3, supply responses in the economy are gaining strength.

The cumulative procurement of rice during thiskharif marketing season has already crested last year's collection. Although wheat procurement has declined quite sharply, the good news is that rabi sowing is up year-on-year backed up by good north-east monsoon rainfall and reservoir water storage levels. Industrial production (IIP) shed the contraction in August and turned in positive momentum in September on a seasonally adjusted basis after a gap of two months.

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