4% inflation target faces food price pressures: RBI bulletin

Mumbai, March 19

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.

8% GDP growth, even higher sustainable

• India can sustain 8% annual GDP growth and the conducive macroeconomic configuration may become a launch pad for a step-up in the country’s growth trajectory, said an article on the ‘State of Economy’ in the RBI’s March Bulletin published on Tuesday.
• Despite the golbal economy losing steam, over the period 2021-24, GDP growth has averaged above 8% . “The underlying fundamentals indicate that this can be sustained and even built upon,” it said

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.