Elevated food prices putting pressure on inflation: RBI
Mumbai: Expressing concerns over price situation, the RBI Monday said expensive food items like cereals and vegetables has continued to put pressure on overall inflation rate.
"Still elevated food inflation, particularly in respect of cereals and vegetables, sustained upside pressures on overall inflation," RBI Governor D Subbarao said in mid-quarter review of the monetary policy.
Given that food inflation remains high, the inflation outlook will be influenced by concerted efforts to break food inflation persistence, he said.
Pinning hopes on rain God's intervention to cool price situation, the RBI chief said "last year's robust rabi production and the monsoon performance so far augur well for growth prospects."
He noted that the onset of the south-west monsoon has been strong and on time.
The inflation outlook going forward will be determined by suppressed inflation being released through revisions in administered prices, including the minimum support prices (MSP) as well as the recent depreciation of the rupee, he added.
The policy review noted that retail inflation, as measured by the new combined (rural and urban) CPI, edged down from an average of 10.2 percent last fiscal year to 9.3 percent in May.
Headline wholesale price index (WPI) inflation eased for three months in succession with the May reading at 4.7 percent, down from an average of 7.4 percent in 2012-13, it said.
All constituent categories, barring food, have moderated, the RBI review said.
In the fuel category, it said, coal and mineral oil prices declined, partly offsetting the upward revision in administered prices of electricity.
Non-food manufactured products inflation too ebbed, driven by metal prices which fell for the eighth successive month in response to softening of global prices, it said.
Easing commodity prices at the global level and weaker pricing power of corporates at the domestic level are having a softening influence, it added.