Stubbornly high food prices slowing drop in inflation to 4%: RBI bulletin

Food price pressures is an obstacle in swifter fall in retail inflation to the Reserve Bank's target of 4 per cent, said an article on the 'State of Economy' in the central bank's March Bulletin published on Tuesday.

Retail inflation based on Consumer Price Index (CPI) is on a decline since December and was at 5.09 per cent in February.

"Even as inflation is on the ebb with broad-based softening of core inflation, the repetitive incidence of short amplitude food price pressures deters a swifter fall in headline inflation towards the target of 4 per cent," said the article authored by a team lead by RBI Deputy Governor Michael Debabrata Patra.

It further said the global economy is losing steam, with growth slowing in some of the most resilient economies and high frequency indicators pointing to further levelling in the period ahead.

In India, real GDP growth was at a six-quarter high in the third quarter of financial year 2023-24, powered by strong momentum, robust indirect taxes, and lower subsidies.

The high visibility of structural demand and healthier corporate and bank balance sheets will likely be the galvanising forces for growth going forward, the article said.

The central bank said the views expressed in the Bulletin article are of the authors and do not represent the views of the Reserve Bank of India.