India’s inflation expected to ease to 4.6% in the first three qtrs of next fiscal: RBI Bulletin

"CPI inflation rose to 5.6 percent in November as the recurrence of food price spikes punctured a brief respite in September and October, but it is expected to ease to 4.6 percent in the first three quarters of 2024-25," the RBI said.

India recorded a retail inflation rate of 5.6% in November, marking a three-month high.

"High-frequency food price indicators point to an increase in prices of key vegetables which may push CPI inflation higher in the near term. The ongoing rabi sowing progress for key crops like wheat, spices and pulses needs to be closely monitored. Elevated global sugar prices is also a matter of concern," it said in the bulletin.

The Reserve Bank of India noted that global commodity prices, especially for agricultural commodities, have generally decreased, except for rice.

However, the central bank underscored that the future inflation outlook is uncertain and will be influenced by unpredictable food prices.

The inflation projection for the fiscal year 2023-24 has been set at 5.4%, aligning with the announcement made by the Monetary Policy Committee (MPC) earlier this month.

"CPI inflation for Q1FY25 is projected at 5.2 percent; Q2 at 4.0 percent; and Q3 at 4.7 percent. The risks are evenly balanced," the RBI said.

According to the bulletin, based on data up to Q2FY24, there is only a 1% probability of stagflation in India, which is a combination of economic stagnation and high inflation.

The global growth outlook is described as fragile, with a potential further slowdown in 2024.

The RBI bulletin projects India's Gross Domestic Product (GDP) growth at 7% for the entire fiscal year 2023-24, with Q3 at 6.5% and Q4 at 6.0%.

It forecasts real GDP growth for Q1:2024-25 at 6.7%, Q2 at 6.5%, and Q3 at 6.4%.