RBI Assessment
A modest easing of headline inflation in the reading for April confirms the expectation that an uneven and lagged pace of alignment with the target is underway but a durable alignment with the targeted 4% inflation could recommence and sustain only in the second half of the financial year
The prices of vegetables, cereals, pulses, meat and fish in the food category may keep the headline [inflation] elevated and closer to 5% in the near term, in line with projections set out in the April MPC resolution in spite of deflation in fuel prices and further softening of core inflation to a new historic low
While statistical base effects may help pulling down the headline inflation in July and August, it is expected September may see a reversal.
It is only in the second half of the year a durable alignment with the target may recommence and sustain till numbers closer to the target are sighted during the course of 2025-26
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