India's economy stable in Jun-Jul amid tensions, fears: RBI Bulletin

The global macroeconomic environment remained fluid in the two months.

Headline consumer price index (CPI)-based inflation remained below 4 per cent for the fifth consecutive month in June, driven by deflation in food prices, the article on the state of the domestic economy said.

System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets. The external sector remained resilient, backed by ample foreign exchange reserves and a moderate external debt-to-gross domestic product ratio, it observed.

Another article in the bulletin mentioned that a 10-per cent rise in global crude oil prices could raise India’s headline inflation by around 20 basis points on a contemporaneous basis, as per empirical estimates.

The increase in oil import dependency warrants measures not only to contain the spillovers to domestic prices, but also to gradually transit towards alternative sources of fuel for more efficient management of domestic fuel prices in the long run, the article on the oil price and inflation nexus in the country said.

ALCHEMPro News Desk (DS)