Shruti Suman
Amidst the soaring vegetable prices across the nation, the RBI has issued statements that could bring relief to consumers. RBI Governor Shaktikanta Das, during a press conference on Wednesday, mentioned that vegetable prices in India have started to ease and are expected to drop starting from September.
Why Are Vegetable Prices Expected to Decrease in September?
The RBI’s statement arrives at a time when the escalating costs of vegetables and grains have led to a 7.44% surge in retail inflation in July, the highest in 15 months. Explaining why vegetable prices are projected to decrease from September, Das highlighted the increase in supply.
“Looking ahead, the surge in vegetable prices observed in July is beginning to correct itself, primarily due to declining tomato prices. The arrival of new tomato supplies in markets is already causing prices to soften, coupled with proactive supply management for onions. We anticipate a noticeable slowdown in vegetable inflation starting from September,” stated the RBI Governor.
Consumer price inflation reached a 15-month peak of 7.4% in July, having stayed below the upper tolerance band of 6% for the previous three months. This notable increase was primarily driven by the sharp escalation in tomato and other vegetable prices.
Vegetable Prices Have Risen by 37%
It’s important to note that vegetable prices have risen by 37% year-on-year, with tomatoes leading the surge at a staggering 201% price hike.
“We expect to witness a significant decline in vegetable inflation by September,” emphasized Shaktikanta Das.
He also added that the outlook for cereal prices appears positive, despite potential geopolitical tensions that might impact food prices.
Addressing elevated core inflation, Shaktikanta Das noted that the gradual easing observed over recent months is a sign of successful monetary policy transmission. He emphasized the central bank’s commitment to prevent inflation from becoming persistent and widespread across various sectors.
“The frequent occurrences of recurring shocks in food prices pose a risk to the stabilization of inflation expectations, a process that has been ongoing since September 2022. We will remain vigilant about this,” mentioned Shaktikanta Das.
RBI’s Approach to Control Price Surge
Stating that the country has raised rates by a total of 250 basis points since May 2022 to curb rising prices, he affirmed that the RBI’s focus remains on aligning inflation with the Monetary Policy Committee’s medium-term target of 4%.
He further emphasized that maintaining price stability is crucial for sustainable growth, and the conditions are favorable for growth to persist and for the capex cycle to gain momentum in 2023-24.
Regarding the rupee, the head of the central bank reiterated that while there’s no specific target, the RBI will continue to bolster its foreign exchange reserves to manage potential dollar outflows.
“The Reserve Bank has also proactively worked to enhance systemic resilience and efficiency by maintaining external stability and increasing forex reserves,” he remarked.
Government Criticized for Rising Vegetable Prices
Earlier, the central government faced significant criticism when tomato prices surged up to eightfold due to heavy rains in key cultivation areas. Although tomato prices are gradually decreasing, a steep rise in onion prices raised concerns
