‘In ation vulnerable to rising heat’

In the near term, extreme weather events and prolonged geopolitical tensions may pose a risk to price stability, o cials led by deputy governor Michael D. Patra write in an article on the ‘State of the Economy’ in April edition of the RBI Bulletin

Extreme weather events could pose a risk to in ation Reserve Bank of India’s o cials cautioned in the April edition of the RBI’s Bulletin released on Tuesday.

“CPI (Consumer Price Index) in ation has gravitated to 4.9% in March after averaging 5.1% in the preceding two months,” of

cials led by deputy governor Michael Debabrata Patra wrote in an article titled “State of the Economy.” “In the near term, extreme weather events may pose a risk to in ation along with prolonged geopolitical tensions that could keep crude oil prices volatile,” they added.

The o cials agged the

World Meteorological Organisation’s red alert about global warming in its latest “State of the Global Climate 2023”, mentioning a high probability that 2024 would breach the 2023 threshold as the hottest year on record as the world moves toward a freshwater shortage crisis. They cited the WMO as saying, “data from the India Meteorological Department re ects a worrying escalation in extreme weather events necessitating an urgent and collective response”. “Amidst these dire forecasts, there is also hope,” they wrote. “According to Australia’s Bureau of Meteorology and the U.S. National Oceanic and Atmosphere Administration, the chances of La Nina, which result in heavy rainfall in India – emerging after June have risen even as El Nino is dissipating.” Emphasising in ation dynamics in recent prints as a positive development favouring India’s growth ambitions, they said beginning January 2024, the softening of headline in ation was providing a tailwind to growth impulses. “The softening of core (CPI excluding food and fuel) in

ation to historic lows in March, driven by moderation across goods and services components, gives credence to the conduct of disin ationary monetary policy,” they observed.

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