The Cooling Effect
(Source: The Indian Express, Editorial Page)
Also Read: The Indian Express Editorial Analysis: 13 June 2025
Also Read: The Hindu Editorial Analysis: 13 June 2025
| Topic: GS3 – Indian Economy, Agriculture, Monetary Policy |
| Context |
| India’s consumer price index (CPI) has eased to 4.75% in May 2025 due to a decline in food prices. This comes at a crucial time when the RBI has retained its benchmark repo rate and the agricultural sector anticipates a normal monsoon. The editorial explores how these intersecting factors influence inflation and food security. |
Recent Inflationary Trends:
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Retail CPI: Inflation eased to 4.75% in May from 4.83% in April.
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Food Prices: Food inflation moderated to 8.69%, aided by cooling vegetable and pulse prices.
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Core Inflation: Stable around 3.8%, reducing policy concerns for RBI.
Role of Monsoon in Inflation:
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IMD has forecasted a normal southwest monsoon, raising hopes for a good kharif harvest.
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Agricultural output will impact cereal and vegetable prices, particularly onion and tomato.
RBI’s Policy Response:
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RBI kept the repo rate unchanged at 6.5% to balance inflation and growth.
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RBI signaled cautious optimism but maintained its stance to assess monsoon outcomes before easing further.
Risks and Uncertainties:
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Global oil prices, commodity volatility, and geopolitical tensions remain inflationary risks.
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Unseasonal rains or pest damage could reverse recent food price gains.
Conclusion / Way Forward:
- Strengthening agricultural supply chains and warehousing can prevent price shocks.
- Continued cautious RBI policy, combined with real-time inflation monitoring, is essential.
- A good monsoon can be a stabilizing factor, but preparedness for climate disruptions is crucial.
Inflation Snapshot (April–May 2025):
| Indicator | April 2025 | May 2025 |
|---|---|---|
| Retail Inflation (CPI) | 4.83% | 4.75% |
| Food Inflation | 9.12% | 8.69% |
| Vegetable Inflation | 27.8% | 23.6% |
| Pulse Inflation | 16.84% | 15.2% |
| Repo Rate (RBI) | 6.50% | 6.50% |
| Practice Question: “The recent moderation in inflation must not delay structural reforms in India’s food economy.” Discuss. (GS Paper 3 – 10 Marks – 150 Words) |
