The upturn was broad-based, provoking households to expect that the general level of prices would increase by more than the current rate in the months ahead. Input costs facing both farms and firms rose, but weak pricing power in conditions of subdued demand prevented a fuller-blown pass-through into retail inflation.
In the MPC’s assessment, inflation will likely rise from current levels in the rest of the year, with farm loan waivers and the implementations of pay and allowance revisions by states a la the centre posing upside risks. The MPC also pensively expressed concern about the spectres of geopolitical tensions and imminent normalisation of systemic central bank balance sheets that loomed over the outlook.