On a positive note, Reserve Bank economists expect the slowdown in inflation, largely driven by the correction in vegetable prices since the July peak, to continue in September as well. “The correction is not complete and is expected to continue to depress retail inflation in its September reading,” RBI economists wrote in the report. “In addition, there are early signs of corrections in a wide range of vegetable prices beyond the group of tomatoes, onions and potatoes,” the report said. The views, however, are not those of the RBI.
A new risk to global financial stability comes from commodity markets, with crude oil prices at their highest level in 10 months due to the voluntary extension of production cuts by Saudi Arabia and Russia until the end of 2023. The strength of the US dollar on safe-haven demand is also what is driving crude prices higher. According to market analysts, a 10% rise in crude prices would have an impact of 0.25 percentage points on consumer price inflation.
Central bank economists have acknowledged that core inflation is stabilizing, as evidenced by a widespread easing of price pressures among its components, both goods and services. Even the rise in rural and urban consumer price indices has eased. This is an important development in the conduct of monetary policy, they said.
Headline CPI inflation moderated to 6.8% in August from 7.4% in July.
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On a positive note, Reserve Bank economists expect the slowdown in inflation, largely driven by the correction in vegetable prices since the July peak, to continue in September as well. “The correction is not complete and is expected to continue to depress retail inflation in its September reading,” RBI economists wrote in the report. “In addition, there are early signs of corrections in a wide range of vegetable prices beyond the group of tomatoes, onions and potatoes,” the report said. The views, however, are not those of the RBI.
A new risk to global financial stability comes from commodity markets, with crude oil prices at their highest level in 10 months due to the voluntary extension of production cuts by Saudi Arabia and Russia until the end of 2023. The strength of the US dollar on safe-haven demand is also what is driving crude prices higher. According to market analysts, a 10% rise in crude prices would have an impact of 0.25 percentage points on consumer price inflation.
Central bank economists have acknowledged that core inflation is stabilizing, as evidenced by a widespread easing of price pressures among its components, both goods and services. Even the rise in rural and urban consumer price indices has eased. This is an important development in the conduct of monetary policy, they said.
Headline CPI inflation moderated to 6.8% in August from 7.4% in July.
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