Unseasonal Rain May Keep Prices at Harmful Levels for Consumers: Sbi Survey | So Good News


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Author CNBCTV18.com IST (Printed)


The upcoming unscheduled meeting of the RBI is just one part of the regulatory mandate and “we do not believe any other policy will be announced at this meeting”, according to SBI Research, the research arm of SBI, India’s largest bank by assets.

The Reserve Bank of India (RBI) is expected to raise the benchmark lending rate by 50 basis points in mid-December, with the lowest possibility of a hike of 75 basis points, according to SBI Research, a research firm. India’s largest lender is property. The report comes days before the Monetary Policy Committee (MPC) meeting, where the RBI’s interest rate decision-making body will discuss its response to the government explaining why inflation has not been controlled.

“This unscheduled meeting is part of the regulatory mandate, and we do not believe that any policy will be announced at this meeting,” SBI Research said in its Ecowrap report.

This will be the first time since the monetary policy framework, which was introduced in 2016, that requires the RBI to report to the Center on failure to keep inflation below six percent for three consecutive quarters.

The latest MPC minutes show that some members want an early end to inflation, SBI Research said.

Globally, investors are awaiting the outcome of the two-day meeting at the Fed, which begins on Tuesday, where the US central bank could decide on a 75-bps hike in interest rates.

The SBI study also pointed out that erratic rainfall in several parts of the country, including some food producing countries, is affecting the Kharif crops. In Uttar Pradesh, unseasonal rainfall was more than 400 percent above average and 54 percent above normal in the rest of the country, it said.

Can the buyer expect prices to cool down soon?

Prices of grains, vegetables, milk, pulses and edible oils, which account for more than a quarter of the Consumer Price Index (CPI) – the official gauge of inflation in India – are likely to remain high in the coming months, according to SBI Research.

In 2019, when it rained 44% more than it was in October, consumer price inflation rose 10.9% against 4.9% in the previous three months.

This suggests that erratic rains may hamper food supply in the coming months, according to the SBI research team.


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