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The finance ministry’s monthly economic review for July said the government has already taken pre-emptive measures to restrain food inflation which, along with the arrival of fresh stock, are likely to subside price pressure in the market soon. It said the external sector requires a closer watch to strengthen merchandise export growth in the face of slowing global demand. Services exports continue to do well and are likely to continue doing so as the preference for remote working remains unabated, typically manifested in the proliferation of global capability centres.
The report said the recent price spike of certain food items is expected to be transitory. Tomato prices are likely to decline with the arrival of fresh stocks by the end of August or early September. Further, enhanced imports of tur dal are expected to moderate pulses inflation. These factors, along with the recent government efforts, can soon materialise moderation in food inflation in the coming months, the report added.
It said the impact of the global disruptions was clearly evident in India’s inflation numbers. Retail inflation spiked to 7.4% in July 2023, with specific food commodities mainly driving the increase. Cereals, pulses and vegetables exhibited double-digit growth in July compared to the corresponding period last year.
“The steady performance of the agriculture sector, along with fresh arrivals in the market, would aid in curbing the inflationary pressures caused by supply disruptions and elevated international food prices. Despite the fear of El Nino, the progress of the monsoon has been quite active so far,” according to the report.
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