Global uncertainty may keep inflation elevated, says FinMin

The ministry added that this warrants greater vigilance by govt and the RBI

- Rajeev Jayaswal

NEW DELHI: Global uncertainty and domestic disruptions may keep inflationary pressures elevated in coming months, the finance ministry said on Tuesday, adding that this warrants greater vigilance by government and the Reserve Bank of India.

India's retail inflation jumped to a 15-month high to 7.44% in July from 4.87% the preceding month, with food inflation at its highest in 39 months as vegetables, cereals and pulses prices spiked.

"Monsoon rains in August have been deficient at the time of writing," the ministry said in its latest monthly economic review, hinting at persistent supply-side uncertainties. Adverse geopolitical developments could put pressure on food prices globally, it said. Fresh supplies of farm produce and the government's timely measures would soften food inflation, the July review, released Tuesday, added.

"The government has already taken pre-emptive measures to restrain food inflation which, along with the arrival of fresh stock, is likely to subside price pressure in the market soon." Elevated inflationary pressures may pose a challenge to macroeconomic stability as food inflation has shown an uptick globally in July after a continuous decline since April 2022, the review cautioned.

The impact of global disruptions was clearly evident in India's inflation numbers, the report said.