Indian economy is gathering momentum in the second quarter, though inflation would continue to average above the central bank’s comfort zone of 6%, said an article in the RBI’s monthly bulletin released on Thursday, August 17. The consumer price index (CPI) based retail inflation shot up significantly to 7.44% in July, from 4.87% in the preceding month, mainly due to soaring prices of tomato, vegetables and other food items.
The uptick in inflation in its June reading mutated in July, with the unprecedented shock to tomato prices spilling over to prices of other vegetables, said the article on ‘State of the Economy’. “While core inflation witnessed a moderation, headline inflation is expected to average well above 6% in the second quarter,” it said.