“Improved reservoir levels help curb food inflation”

Despite a rather erratic monsoon, India's water storage facilities have been replenished, boding well for the current kharif crop and upcoming rabi farm production, which in turn should help further bring down food inflation in the coming months, the finance ministry said on Thursday, even as it noted waning confidence levels among consumers and industry.

The ministry stressed in its monthly economic report for July that its forecast of real GDP growth of 6.5-7 percent for this year remains valid and said that inflation is easing. The increase in exports and imports in the first four months of this fiscal year indicates that a turnaround is underway and global demand is recovering.

The study stressed that the central bank's consumer confidence and industrial forecast surveys “need to be monitored for future trends.” Both surveys indicated a decline in confidence in the current economic situation and optimism about the likely prospects for the coming year.