Delivering the statement after the Monetary Policy Committee (MPC) meeting, Das said: “The headline inflation is likely to witness a spike in the near months on account of supply disruptions due to adverse weather conditions. It is important to be vigilant about these shocks with a readiness to act appropriately so as to ensure that their effects on the general level of prices do not persist.”
The central bank had issued a similar warning in its July monthly bulletin also. There it had flagged up the steep spike in tomato prices, which was causing trouble for citizens across the country. “Spillovers from tomato price spikes to prices of other commodities and unhinging inflation expectations remain a major concern. Increasing amplitudes of price spells over the years calls for improving the supply chains to contain overall inflation volatility,” it had stated in the State of the Economy article in the RBI‘s bulletin.
On Thursday, the RBI’s statement said that erratic rains can play havoc with the inflation math. Such a development can affect agriculture output, inflating vegetable prices further.
“There are risks from the impact of the skewed south-west monsoon so far, a possible El Niño event and upward pressures on global food prices due to geopolitical hostilities,” the statement said.But it also added that the central bank is keeping a close eye on the situation and will act depending on how the situation develops. “The MPC will maintain a close vigil on the evolving inflation scenario and remain resolute in its commitment to aligning inflation to the target and anchoring inflation expectations. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth,” it added.
