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The Reserve Bank of India's (RBI's) article in the September Bulletin has said that food price volatility remains a contingent risk even as the overall retail inflation has remained below the target of 4 per cent for the second consecutive month in August. It further said that household consumption is poised to grow faster in the second quarter as headline inflation eases, with a revival of rural demand already taking hold.

It stated ‘Consumer price index (CPI) inflation came in below the Reserve Bank's target for the second consecutive month in August, although in light of the recent experience, food price volatility remains a contingent risk.’ Besides, it said 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 the first quarter of this fiscal year.

Referring to bank deposits, it also noted that consistent with rising returns on term deposits, there has been higher accruals (16.6 per cent y-o-y growth in June 2024). The share of savings deposits in total deposits has come down to 29.8 per cent in June 2024 from 31.8 per cent a year ago. The share of term deposits offering interest rates over 7 per cent increased to 66.9 per cent in June 2024, from 33.5 per cent in March 2023 and 4.5 per cent in March 2022. Moreover, it said recent research on the energy outlook indicates that energy transition has accelerated in recent years, with the pace of clean technology deployment and capital investment surging to record levels. The Reserve Bank said views expressed in the Bulletin article are of the authors and do not represent the views of the central bank.