Erratic rainfall may lead to higher inflation in near term: BoB research

Economics research department of Bank of Baroda (BoB) said that erratic rainfall across the country has resulted in lower 'kharif' sowing this year which is likely to translate into higher inflation in the near term. A report prepared by the department said that rainfall has been six per cent above the long-period average (LPA) till July 30.

However, the Eastern and North Eastern region received lower precipitation, while the North Western region recorded higher rainfall.

This has resulted in lower 'kharif' sowing this year with pulses registering much lower as compared to last year.


"This is expected to translate into a higher inflation in the near term, as IMD expects El Nino conditions will develop in the middle of the monsoon period", the report said.

'Kharif' season is the sowing season from June to the end of October.

The country's CPI inflation rate rose to a three-month high of 4.81 per cent, with WPI inflation at 4.12 per cent.

The RBI Governor-led six-member monetary policy committee (MPC) meeting is scheduled for August eight to ten, the policy decision will be announced on the concluding day of the meeting.

In the last MPC meeting in June, RBI kept the repo rate (interest rate at which the apex bank lends to the banks), unchanged as inflation was above the four per cent target.