Why can't they see it?

"Headline inflation is expected to average well above 6 percent in the second quarter, said the Reserve Bank of India's (RBI) monthly bulletin." "Beating analyst's expectations, India's retail inflation surged to 7.44 percent in July on an annual basis as against 4.81 percent in June, showed data released by the ministry of statistics." ET. "The sharp rise can be attributed to a steeper-than-expected surge in the prices of vegetables, especially tomatoes, over the past month." "In its meeting last week, the Monetary Policy Committee (MPC) had kept the policy rate unchanged at 6.5% for the third consecutive time." "The MPC remains resolute in its commitment to aligning inflation to the 4 percent target and anchoring inflation expectations," said (Governor) Das in the bulletin. By doing nothing? What Das probably means is that we are lucky that the RBI did not reduce the policy rate. "Risk of stagflation currently in India remains very low, with a probability of only 3 percent, notwithstanding a sharp pick-up in inflation, said the RBI's bulletin." DH. If the RBI is trying to allay our fears, the risk must be real. "Stagflation is the phrase when an economy faces moderation in GDP growth and high inflation." "Evidence from 22 economies, particularly those heavily reliant on non-commodity exports, indicates that higher commodity prices and the US dollar appreciation are key factors contributing to the risk of weak economic growth and high inflation, particularly in emerging market economies." "On 26 July, the US Federal Reserve raised rates for the eleventh time in its current round of increases. on 27 July, the European Central Bank (ECB) raised rates for the ninth time in a row. This was followed by the Bank of England raising rates for the fourteenth time on 2 August," wrote Vivek Kaul. India was in a Goldilocks situation with a GDP growth rate of 6.5% in the financial year 2023-24, according to the RBI, and a cooling core inflation which was down from 5.1% in June to 4.9% in July, wrote Sonal Varma & Aurodeep Nandi. But the three bears of higher headline inflation in July along with falling growth rate in the US and China and a K-shaped recovery in India could result in a stagflation -like environment. However, "In our view, with core inflation showing signs of deflation and inflation expectations well contained, the RBI is right to be looking through the current food price shock." Is it? Inflation means prices higher than before which, in turn, means that the rupees in our wallets is buying less than before. Whatever the cause. In July, the consumer price index (CPI) in the US rose by 3.2% year-on-year. bls.gov. The minutes of the July 25-26 meeting of the US Federal Reserve showed that participants are still concerned over inflation rates and may raise the Funds Rate further. ET. That may strengthen the dollar against the rupee and push up cost of imports in India, leading to higher prices. "India, an import dependent country, could feel the heat of a falling Rupee in an inflationary environment as it stands to further the spending decisions of households. Exactly. Don't need a PhD in economics to see that. Why can't they?