December 24, 2024

On November 11, 2024, a worker loaded consumer goods onto a supply truck at the wholesale market in Kolkata, India.

Noor Photos | Noor Photos | Getty Images

India’s overall inflation rate fell from a 14-month high to 5.48% in November.

The figure was down from 6.21% in October and below the 5.53% forecast by economists polled by Reuters.

This comes after the Reserve Bank of India kept interest rates at 6.5% at its latest monetary policy meeting last week, despite an unexpected slowdown in economic growth. India’s economy grew only 5.4% in the second fiscal quarter ended in September, well below economists’ expectations and close to its lowest point in two years.

While the RBI does not provide monthly inflation forecasts, the RBI Headlines are expected to reach 5.7% during the country’s third fiscal quarter ended in December. The central bank forecasts that inflation will reach 4.8% for the full financial year to March 2025.

Looking ahead, the RBI said food inflation is likely to moderate in the fourth fiscal quarter given the seasonal slowdown in vegetable prices and the arrival of autumn harvest. Good soil moisture conditions and comfortable reservoir water levels also favor winter crop production.

Agriculture is a significant component of India’s GDP and food prices also play a key role in the country’s inflation data, which is measured by a separate indicator, the Consumer Food Price Index.

The Reserve Bank of India has previously warned that severe weather events and rising international agricultural prices pose upward risks to food inflation. On December 6, the report stated: “Enterprises expect that the pressure on input costs will continue to increase, and sales price growth will accelerate from the fourth quarter.”

New monetary policy stance?

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