Sep inflation was 5.5%; Oct may be higher: RBI Governor Shaktikanta Das

RBI Governor Shaktikanta Das discusses inflation outlook and economic resilience at the Business Standard BFSI Insight Summit

Reserve Bank of India (RBI) Governor Shaktikanta Das warned that inflation for October is likely to be higher than the 5.5 per cent recorded in September. Speaking to Tamal Bandyopadhyay, Business Standard, at India’s largest banking, financial services, and insurance (BFSI) event, the Business Standard BFSI Insight Summit on Wednesday, Das assured that the RBI is prepared to act with “strength and agility,” likening the Indian economy to a “tiger” for its resilience amid fluctuating global conditions.

 

Inflation in India has been volatile recently, largely driven by surging food prices. September 2024 recorded inflation at 5.5 per cent, led by a 36 per cent year-on-year rise in vegetable prices and a food inflation rate of 9.24 per cent. Despite significant inflationary pressures and external challenges, Das said the RBI remains committed to maintaining stability in the financial system.

 

 

Global markets await US elections and China's fiscal policy

Das pointed to two major international events awaited by financial markets: the outcome of the US elections and announcements from China regarding fiscal policy support.

 

"US elections can go either way until the end. Two things are very clear: overall India-US relations have become much stronger, and that will continue regardless of who wins," Das said. 

Click here for the latest updates on the US Presidential elections 2024.

  He added, "The Indian economy and financial sector are well placed to handle any kind of spillovers from global events. Overall, India’s macroeconomy and macro-financial conditions are very resilient to spillovers from anywhere in the world."

 

'Positives outweigh negatives': Das on India's growth outlook

Addressing India’s growth outlook, the RBI governor highlighted positive trends across key indicators, including Goods and Services Tax (GST) e-way bills, toll collection, air passenger traffic, steel consumption, and cement sales.

 

These gains reflect economic resilience, even as the Index of Industrial Production (IIP) and urban fast-moving consumer goods (FMCG) sales show some moderation, Das said. 

 

Das revealed that the RBI tracks around 70-80 high-frequency indicators to monitor economic conditions. While certain sectors exhibit signs of slowing, “the positives outweigh the negatives,” he said, adding that India’s growth outlook remains optimistic. The International Monetary Fund (IMF) projects a 7 per cent growth rate, while the RBI’s forecast is slightly higher at 7.2 per cent.

 

Looking ahead, Das cautioned about “significant upside risks to inflation” from factors such as geopolitical tensions, fluctuating commodity prices, and climate change.

 

RBI maintains cautious stance

The RBI has maintained the repo rate at 6.5 per cent since February 2023, aiming to bring inflation closer to the medium-term target of 4 per cent.

 

The central bank has projected Consumer Price Index (CPI) inflation for FY25 at 4.5 per cent, assuming a normal monsoon. Quarterly inflation projections are 4.4 per cent for Q2, 4.7 per cent for Q3, and 4.3 per cent for Q4 of FY25.

 

Catch all coverage of the Business Standard BFSI Summit 2024 here.