CPI Inflation Eases But Further Progress Needed To Reach Target

New Delhi, Sep 13 (KNN) Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday indicated that while consumer price index (CPI) inflation has moderated to within the 2-6 percent tolerance band, further progress is necessary to reach the central bank's target.

This statement follows the National Statistical Office's (NSO) recent data release, which showed a slight uptick in CPI inflation to 3.65 percent in August from July's five-year low of 3.60 percent.

Speaking at the Future of Finance Forum 2024 in Singapore, Governor Das stated, "Inflation has moderated from its peak of 7.8 percent in April 2022 into the tolerance band of +/- 2 percent around the target of 4 percent, but we still have a distance to cover."

This cautious stance suggests that the RBI is not considering immediate rate cuts until inflation aligns sustainably with the 4 percent target.

The RBI's projections indicate a gradual decline in inflation from 5.4 percent in 2023-24 to 4.5 percent in 2024-25, and further to 4.1 percent in 2025-26.

Governor Das also highlighted India's economic rebound post-pandemic, with real GDP growth averaging above 8 percent during 2021-24. The RBI forecasts 7.2 percent real GDP growth for 2024-25, citing strong domestic drivers such as private consumption and investment.

The Governor emphasised that this growth outlook is underpinned by macroeconomic and financial stability. He noted ongoing fiscal consolidation efforts and a declining trajectory in public debt levels over the medium term.

Additionally, Das pointed to improved corporate performance, with strong growth in profitability and reduced leverage, as well as strengthened balance sheets of banks and non-banking financial intermediaries regulated by the RBI.

This balanced assessment from the RBI Governor provides insight into India's economic landscape, highlighting both progress and areas requiring continued vigilance in the nation's monetary policy approach.

(KNN Bureau)