MPC minutes show renewed concern for inflation

• Retail inflation in India surged to a 15-month high of 7.44 per cent in July. Food inflation, which accounts for nearly half of the overall consumer price basket, quickened to 11.51%, registering its highest level since April 2020.
• Deputy governor Patra noted that a series of “overlapping localized supply shocks” were contributing to substantial price hikes in price-sensitive food items, feeding into headline inflation.
• External member of the MPC Jayanth Varma expressed discomfort with the panel’s ‘self-congratulatory tone’ in June while warning against declaring victory based on the inflation prints of just a couple of months.”
• In public remarks, Varma commented that the current phase of high inflation in India will be limited to a few months as monetary policy is tight enough to prevent food price shocks from causing broader price pressures

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