Vegetable prices in India are set to undergo a softening trend, with a probable decline expected from September, as highlighted by Reserve Bank of India (RBI) Governor Shaktikanta Das in his recent speech on Wednesday.
The escalating costs of vegetables and cereals have propelled the retail inflation to surge by 7.44% in July, marking its highest point in 15 months.
“We expect to see an appreciable slowdown in vegetable inflation from September,” Shaktikanta Das said.
Despite the potential hindrance of geopolitical tensions on food prices, he mentioned that the prospects for cereal prices remain optimistic.
Shaktikanta Das remarked that despite the persistent elevation of core inflation, the consistent gradual reduction observed in recent months serves as an indication of effective monetary policy transmission.
He stated that the central bank would be vigilant in preventing inflation from becoming enduring and spreading across various segments.
“The frequent incidences of recurring food price shocks pose a risk to anchoring of inflation expectations, which has been underway since September 2022. We will remain watchful of this,” Shaktikanta Das said.
Since May 2022, India has implemented a cumulative increase of 250 basis points in rates to control the upward trajectory of prices. Shaktikanta Das emphasized that the central bank maintains a strong commitment to bringing inflation in line with the Monetary Policy Committee’s prescribed medium-term goal of 4%.
He highlighted that sustainable growth must be grounded in price stability. He further added that the current conditions are conducive for the ongoing expansion to persist and for the capital expenditure cycle to gather momentum in the fiscal year 2023-24.
Regarding the rupee, the head of the central bank restated that while the RBI doesn’t have a particular target, it will maintain its efforts to bolster foreign exchange reserves in order to effectively handle potential dollar outflows.
“The Reserve Bank has also made conscious efforts to improve systemic resilience and efficiency by maintaining external stability and building forex reserves,” he said.