Global economic activity slows while pace of disinflation remains sluggish: RBI Bulletin

According the RBI September bulletin, global economic activity is slowing down while the pace of disinflation remains sluggish, provoking caution among monetary policy authorities. In India, domestic drivers private consumption and gross fixed investment were robust and net exports remained sequentially positive in their support to gross domestic product (GDP) growth in Q1:2024-25. The underperformance of agriculture was compensated for by a buoyant manufacturing sector and resilient services. Household consumption is poised to grow faster in Q2 as headline inflation eases, with a revival of rural demand already taking hold. Consumer price index (CPI) inflation came in below the Reserve Banks target for the second consecutive month in August, although in light of the recent experience, food price volatility remains a contingent risk.