The final stretch of disinflation hinges on controlling food inflation and mitigating its spillover effects on inflation expectations and core inflation.
The bulletin. said that the monetary policy remains committed to aligning inflation with its target. However, geopolitical conflicts, an uncertain global outlook, volatile financial markets, and climate-related shocks pose key risks to both growth and inflation forecasts.
Despite these challenges, domestic economic activity is expected to remain strong, supported by solid fundamentals. A revival in private consumption, aided by easing inflation and a rebound in rural demand, is anticipated to be a cornerstone of this growth, highlight the RBI Bulletin for October 2024.
Additional factors, such as the government’s capital expenditure push in infrastructure, increased investment activity, and a stronger agricultural sector, contribute positively to the momentum, it showed.
Headline inflation is projected to continue its decline, with expectations for moderation in 2024-25, although the pace may be slow and uneven. Core inflation, which reached its lowest level of 3.1 percent in May 2024—the lowest since January 2012—has recently shown some increase in July and August but remains generally subdued due to disinflationary monetary policies.