India Foresees Relief in Food Inflation Amid Favorable Oil Prices

India anticipates a reduction in food inflation due to stable climatic conditions and low oil prices, according to a government report. However, the central bank highlights potential volatility in food prices. Despite maintaining a GDP growth projection, the report indicates a decline in urban consumption and exports, citing high transport costs as a significant challenge.

India is hopeful that food inflation will decrease in the absence of climatic shocks, and stable low oil prices are expected to be a positive factor for the economy, according to the government's monthly economic report released on Thursday.

In a recent announcement, India's central bank stated that headline inflation for the second half of the fiscal year could average 4.5%, buoyed by weaker crude oil prices. However, the bank also warned that fluctuations in food prices could present challenges. Retail inflation in India rose to 3.65% in August from 3.60% in July, driven by higher vegetable prices.

The report maintained the nation's GDP growth forecast of 6.5%-7% for the current fiscal year but noted weakening urban consumption, as reflected in declining auto sales from April to August. Elevated transport costs were highlighted as a significant obstacle for Indian businesses trying to boost exports.

Indian goods exports fell for the second consecutive month in August. Traders attributed this decline to increasing shipping costs, an economic slowdown in China, and recessionary trends in Europe and the United States.

(With inputs from agencies.)