Indicators show inflation may be peaking, RBI says

The Reserve Bank of India in its July bulletin has said that there are indications that inflation may be peaking, adding that the prognosis may be premature.

Inflation, measured by the consumer price index (CPI), came in at 7.01% in June compared with 7.04% in May and 7.79% in April, still above the MPC's tolerance band.

Several indicators suggest that the Indian economy is making resilient progress in the first quarter of FY23, in spite of the drag from global spillovers, elevated inflation and some slackening of external demand as geopolitical developments take their toll on world trade, the paper said.

"A sliver of hope has become visible in the recent moderation in global commodity prices, and especially food prices. This suggests that unjust inflation may be peaking, providing a breather for beleaguered nations across the world," the report said.

In an alternative simulation which incorporates the policy actions undertaken so far, the easing of inflation could be even sooner and faster. The key is the direction of change in inflation – not its level – in these extraordinary times."

The RBI has asserted that the Indian economy is showing resilience in a global landscape marred by fears of recession and war.