Economy News

Finance Ministry stated in its latest monthly economic review that risks to growth arise from escalating geopolitical conflicts, deepening geoeconomic fragmentation and elevated valuations in financial markets in some advanced economies. Their spillover effects on India could cause negative wealth effects, impacting household sentiments and altering spending intentions on durable goods. Barring a sharp rise in the prices of a few vegetables, inflation appears well contained. In the medium term, favourable factors, such as rejuvenated reservoir levels, healthy Kharif crop sowing brightening the agriculture output prospects and ample food grain stocks, would help contain price pressures. Also, inflation expectations by households and businesses have been softening, as RBI and IIMA surveys indicated. In this context, the headline inflation rate, influenced as it is by a few food items, may not be the most accurate gauge of the underlying demand conditions in the economy.

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