The arrival of fresh harvests of tomatoes, onions, and potatoes has been reflected in higher mandi arrivals, easing supply pressures.
December data indicates further corrections in vegetable prices, while favorable soil moisture and reservoir levels are expected to support a robust Rabi harvest. Additionally, benign global food and energy prices are expected to keep food inflation risks low in the near term.
BoB’s Economic Conditions Index (ECI) shows minimal sequential price growth in December, at 0.1 per cent compared to 0.4 per cent in November. The report suggests that these favorable inflation trends may guide the Reserve Bank of India (RBI) towards a more accommodative monetary policy stance in the coming months, as demand-side pressures remain contained.
The report highlights that November 2024 CPI inflation moderated to 5.5 per cent, down from 6.2 per cent in October 2024, aided by broad-based declines in food prices.
Notably, vegetable inflation dropped sharply to 29.3 per cent in November, compared to 42.2 per cent in October. Key staples like pulses, fruits, and cereals also saw price relief, attributed to a good Kharif harvest and seasonal factors.Core inflation (excluding food and fuel) held steady at 3.7 per cent in November 2024, with most demand-driven subcomponents showing subdued momentum.While there was a slight uptick in household goods and services during the festive season, categories like clothing and footwear remained stable. A dip in gold prices contributed to easing personal care inflation.
On a month-on-month basis, headline CPI inflation declined for the first time since January 2024, with food inflation entering deflation territory at -0.6 per cent in November, compared to a 2.6 per cent rise in October. The report noted corrections in key segments like vegetables, oils, and fruits.
Content Source: economictimes.indiatimes.com