A strong rabi harvest, increased acreage for summer crops, and favourable southwest monsoon forecasts are expected to boost the agricultural sector. “Headline CPI inflation fell for the sixth consecutive month to its lowest since July 2019, primarily driven by the sustained easing in food prices,” RBI stated. This means inflation appears to be easing, with headline Consumer Price Index (CPI) inflation falling for the sixth consecutive month to a level last seen in July 2019, primarily due to a decline in food prices. Though domestic financial markets remained volatile through April, they began to recover from mid-May.
One of the key articles in the bulletin examines the relationship between economic activity and the use of banknotes. The authors used nightlights data and tax collection figures to assess formal economic activity on currency circulation.
“Leveraging high-frequency monthly nightlights data as a proxy for total economic activity and tax collection data as a measure of formal economic activity, the analysis isolates the effect of formalisation on Notes in Circulation (NiC), controlling for aggregate economic output,” RBI stated in the bulletin.
They found that from 2014 to 2024, the growth in NiC was much lower than in the previous two decades. The gap between NiC growth and GDP growth, which was wide between 1994 and 2004, has since narrowed. The study highlights that greater formalisation of the economy, reflected in tax data and reduced reliance on cash, has a dampening effect on banknote usage.
Another article explores how digital data can provide insights into India’s tourism trends. Using Destination Insights with Google, the study found a strong link between foreign tourist arrivals and online travel-related searches from international users. The search trends not only reflect current tourism movements but also serve as a predictive tool for future arrivals. The results suggest that internet search data can be used as a reliable early indicator to monitor inbound tourism.
The final article focuses on the impact of weather anomalies on vegetable prices, a key driver of food inflation in India. The research concludes that irregularities in temperature and rainfall significantly influence price volatility.
“The volatility in vegetable prices is often exacerbated by supply-side disturbances, predominantly driven by weather shocks, warranting regular monitoring of evolving weather conditions,” the bulletin says.
Notably, temperature anomalies have a quicker and stronger effect on prices than rainfall fluctuations. This growing sensitivity underscores the importance of adopting climate-resilient farming techniques and crop varieties to mitigate inflationary risks.