RBI: Food inflation must be monitored, as rural demand is rising due to improved agricultural prospects

With the strengthening of domestic demand, the country's economic growth is headed towards growth again. However, food inflation needs to be monitored. RBI said in the bulletin, the economic outlook for 2025 varies from country to country. The US economy is slowing down. Europe and Japan are improving marginally.

According to the bulletin, the country's economic activity has gained momentum in the second half of 2024-25. This growth is also reflected in the growth of real GDP in the first annual advance estimates of the National Statistical Office. Inflation has declined for the second consecutive month in December.

If seen, rural demand continues to grow which is supported by better agricultural prospects. A revival in public capital spending on infrastructure is likely to boost growth in key sectors. The article does not reflect the views of the Reserve Bank of India (RBI). These are the authors' own views.

This is the second consecutive month in which the headline inflation continuously fell back in December, dragged by a winter glut of fruits and vegetables and a crash in their prices. In fact, an article written by the RBI Deputy Governor Michael Debabrata Patra went on to say now was the time to boost consumer demand and accelerate investments.

The article also said that there are signs of a pick-up in economic activity in the second half of 2024-25, which is also clear from the estimates of the National Statistical Office of India (NSO). The article said that corporate India is expecting better revenue and income growth in the third quarter as compared to the first half of 2024-25.

Besides, the net profit of Nifty 50 companies is expected to rise at the fastest pace in three quarters. Good results are anticipated especially from banking, finance, and insurance companies. Besides, unlisted companies may outshine listed companies with fast revenue growth.