Retail inflation eases to 6-year low of 2.1% in June
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Time of India
an hour ago
- Time of India
Economists split on interest rate cuts as inflation hits six-year low
Mumbai: Economists are divided on the trajectory of interest rate cuts . While some cite six-year low inflation as grounds for another rate cut in the upcoming August policy, the majority advocate for maintaining the status quo. Those calling for a pause argue that it is prudent to wait and assess inflation trends in the coming quarter and monitor developments around the US trade deal. Economists shared these perspectives with the Reserve Bank of India governor Sanjay Malhotra , deputy governor Poonam Gupta and her team during customary pre-policy consultative meetings held last week. Explore courses from Top Institutes in Please select course: Select a Course Category Public Policy Management MCA PGDM MBA Data Science Technology Project Management healthcare Healthcare Cybersecurity Degree Artificial Intelligence Data Analytics Finance Data Science Others Design Thinking CXO Product Management Operations Management Leadership Digital Marketing others Skills you'll gain: Economics for Public Policy Making Quantitative Techniques Public & Project Finance Law, Health & Urban Development Policy Duration: 12 Months IIM Kozhikode Professional Certificate Programme in Public Policy Management Starts on Mar 3, 2024 Get Details Skills you'll gain: Duration: 12 Months IIM Calcutta Executive Programme in Public Policy and Management Starts on undefined Get Details Since February, the RBI has lowered the repo rate by 100 basis points, or a percentage point, to 5.5%. It has also announced lowering cash reserve ratio by 100 bps in a phased manner beginning September 2025, which is estimated to release ₹2.5 lakh crore in the banking system. When the central bank's six-member Monetary Policy Committee (MPC) meet from August 4 to 6, it is expected to deliberate on the policy repo rate using two key data points: the June quarter GDP projections and the latest retail inflation figures. Consumer Price Index-based inflation slowed to 2.1% in June, well below the RBI's medium-term target of 4%. Meanwhile, estimates suggest that economic growth for the April-June 2025 quarter is tracking above the RBI's projection of 6.5%. Live Events "After having given a steroid dose in the last policy (a 50-bps repo reduction in June), why cut when growth is not faltering? The timing also is not very convincing; there is a lot of uncertainty trade policy-wise and a lot of things are impending," said an economist who attended one of the RBI meetings. Ratings firm ICRA expects GDP growth to be between 6.0% and 6.5% in the first quarter of fiscal 2026, according to a report published last week. IDFC First Bank does not expect any revision to the RBI's FY26 GDP estimate of 6.5%, saying "High frequency indicators continue to show moderation in urban consumption." Official GDP data for the quarter is expected in late August. "We maintain a view of a pause on rates. A 25-bps cut would likely cause real rates (based on 12M ahead inflation) to fall sharply for FY27-which the MPC would prefer to avoid," said Anubhuti Sahay of Standard Chartered in a report published on July 22. Speaking at an event on Friday, governor Malhotra reiterated that price stability remained the central bank's primary objective. He remarked that while the RBI has won the "battle" against inflation, the war continues. Given the forward-looking nature of monetary policy, decisions will be based on data reflecting a six-to 12-month outlook rather than current figures. "Monetary policy, being data driven and more on the outlook, will be guided by the revised numbers, if any, and take a call," Malhotra said. The RBI has projected retail inflation to be 3.7% for the current fiscal year, though the projection for the fourth quarter remains above 4% at 4.4%. "It may be, you know, revised downwards given the fact that the numbers that are coming in are lower than what we had projected even for Q1," Malhotra added. "If the food prices are lower, inflation would be around 4%. It's all statistical right now, and the base effect would be revised next year and because of low food inflation now, it could lead to lower inflation in Q1FY27," said another economist who has conveyed to the RBI that a rate cut in August would benefit the economy. DBS Bank expects another 50-bps rate cut this calendar year, with half that in August. "The ongoing disinflationary phase, coupled with moderation in growth indicators, provides room for the central bank to frontload rate cuts... Factoring in the current inflation series, we expect unfavourable base effects to prop FY27 inflation to average 4.3% yoy vs 3.0% in FY26," Radhika Rao of DBS Bank said in a report published on July 25 The RBI will release its inflation projections for Q1FY27 for the first time on August 6.
The Hindu
6 hours ago
- The Hindu
CPI(M) flays economic priorities of State, Centre
Senior leaders of the CPI(M) flayed the State and the Central government for extending a red carpet to the corporates with the taxpayers' money while the burden of price rise was being borne by the poor. The CPI(M) leader U. Basavaraj said that though the people of the country pay ₹50 lakh crore in taxes to the Centre and ₹3-₹4 lakh crore is received by the State government, the amount was being used to benefit the corporate companies. He was speaking at the concluding programme of the political campaign organised by the CPI(M) Mysuru district committee at Gandhi Square here. Mr. Basavaraju said India ranked 105th in the Global Hunger Index, and the unemployment rate was high; hence, the claim that it was the fourth-largest economy was questionable. Though nearly 70 crore people were receiving rations through the public distribution system and nutritious food was being distributed through the Anganwadis, the scourge of hunger and malnutrition persisted and put a question mark on the claims of being the fourth largest economy, said Mr. Basavaraju. The economic policies of the Central and State governments also received flak, and the CPI(M) wondered whether the two were working for the corporates or the economically impoverished section of the population. District secretary Jagadeesh Surya said that no project has been introduced in the district for job creation. There is neither a government law college nor an engineering college in the district, and no government seems to be concerned about it, he added. The district ranks second in the State in terms of farmer suicides, but the State and Central governments are not focusing on improving farmers' lives here, he said. Mr. Jagadish Surya urged the government to establish ward-level clinics and strengthen primary health centres in the district. He also demanded that farmers cultivating gomala (common) and forest lands be issued cultivation rights. Homage was also paid to the former Chief Minister of Kerala V.S. Achuthanandan who died recently.
Time of India
11 hours ago
- Time of India
How Oman kept 2025 inflation at 0.81%: Through subsidies, controlled imports, and stable food supply
Oman's overall inflation climbed modestly by 0.81% during January–May 2025/Representative Image TL;DR: Oman 's inflation rose by 0.81% in the first five months of 2025, compared to the same period in 2024. Import prices increased by 1.3%, producer prices by 4.1% in Q1. Food inflation declined slightly due to cheaper vegetables and seafood; highest price growth seen in miscellaneous goods & services (+6.04%). Regional variation: highest in Al Dakhiliyah (1.58%), Musandam (1.51%); lowest in South Al Batinah (−0.04%). Oman's overall inflation climbed modestly by 0.81% during January–May 2025, a continuation of stable consumer price trends, according to CPI data released by the Ministry of Economy. While import and producer costs edged upward, robust food price controls and government support helped moderate overall pressure on households. Inflation Drivers: Import & Producer Costs The slight increase in Oman's inflation can be largely attributed to shifts in external costs, particularly import and production prices. The Import Price Index rose by 1.3%, indicating moderate exposure to global supply chain pressures and commodity fluctuations. Notably, imported food and construction materials were key contributors to the increase, though the effects were softened by long-standing trade relationships and bulk procurement strategies. Meanwhile, the Producer Price Index jumped 4.1% in Q1 2025 compared to the same period last year. This rise primarily reflected higher input costs in manufacturing and energy-intensive sectors such as cement, metals, and transportation. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Access all TV channels anywhere, anytime Techno Mag Learn More Undo However, thanks to Oman's proactive fiscal management and diversification efforts, the pass-through to consumers remained relatively low. Food Prices Provide Relief Amid global concerns over food security, Oman has managed to keep food inflation under control, reflecting the success of its domestic agricultural initiatives and subsidies. The prices of food and non-alcoholic beverages fell by 0.17% as per Oman News Agency, with noticeable drops in vegetables (–4.63%), seafood (–3.69%), and meat (–0.13%). Government procurement programs, coupled with seasonal domestic supply from Dhofar and Al Batinah regions, contributed to keeping prices stable. Other staples such as bread, cereals, and non-alcoholic beverages also saw marginal declines. However, inflation was observed in sugar and sweets (3.13%), dairy and eggs (2.88%), oils and fats (1.28%), and fruits (1.05%), largely due to higher import freight rates and regional demand during Ramadan and summer tourism peaks. Still, the overall food basket remained stable, avoiding the volatility seen in other parts of the Gulf. Category Trends: Beyond Essentials Beyond food, the miscellaneous goods & services segment saw the sharpest price increase at 6.04%, encompassing personal care, financial services, and insurance. Healthcare costs rose by 2.71%, partly due to higher medical input costs and increased demand for private services. The transport category also recorded a 2.68% increase, mostly due to rising vehicle maintenance and insurance costs, while hotel and restaurant prices were up by 1.08% due to strong tourism inflows and peak season tariffs. Notably, tobacco and telecom costs remained stable, reflecting government regulation and price monitoring efforts. Regional Inflation Patterns Inflation levels varied across governorates, with inland and tourism-heavy areas showing higher growth: Al Dakhiliyah (1.58%) and Musandam (1.51%) posted the highest rates due to increased transportation and services-related costs. Other regions like South Al Sharqiyah (1.24%), Al Dhahirah (1.09%), and Al Wusta (1.06%) also saw moderate increases. On the other hand, South Al Batinah recorded a marginal deflation of –0.04%, possibly linked to oversupply in food production and lower transportation costs due to infrastructure upgrades. Northern regions like North Al Sharqiyah (0.21%) and North Al Batinah (0.42%) maintained inflation well below the national average. Why It Matters Consumer Relief : With subsidies in place, basic needs like food, utilities, and fuel remained stable, safeguarding purchasing power for low- and middle-income households. Macroeconomic Resilience : The contained inflation supports Oman's broader economic goals, particularly those outlined in Vision 2040 and the Tenth Five-Year Plan. Growth Sectors Cushion Impact : Continued expansion in agriculture, fisheries, and logistics helped offset volatility in import-heavy sectors. Investors Watchful : A low, predictable inflation environment is crucial for investor confidence, especially as Oman seeks to diversify its economy and attract FDI in logistics, tourism, and green energy. Oman's moderate inflation of 0.81% through the first five months of 2025 reflects an economy balancing external cost pressures with effective internal controls. Strategic food security measures, fiscal prudence, and growing self-reliance in agricultural production have all contributed to keeping price rises contained. With regional inflation disparities narrowing and overall consumer prices largely under control, Oman is on track to sustain economic stability while building long-term resilience.
