Reserve Bank on Wednesday said it expects retail inflation at 5.2% in the first half of the current fiscal and revised downwards the target to 5% for the quarter ended March.
While headline inflation at 5% in Feb 2021 remains within the tolerance band, some underline constituents are testing the upper tolerance level. Going forward, the food inflation trajectory will critically depend on the temporal and special progress of southwest monsoon in the 2021 season, RBI Governor Shaktikanta Das said on Wednesday while announcing the first monetary policy for the current fiscal.
Reserve Bank of India (RBI) has kept the key repo rate unchanged at 4% to support growth in the current situation.
Mr. Das said there has been some respite from the incidence of domestic taxes on petroleum products through coordinated actions by the Centre and States could provide relief on top of the recent easing of the international crude prices.
However, the combination of international commodity prices and logistics cost may push up input price pressures across manufacturing and services, he added.
“Taking into consideration all these factors, the projection for CPI inflation has been revised to 5% in Q4 of FY2021; 5.2% in Q1 FY2021-22; 5.2% also in Q2 of FY22; 4.4% in Q3 and 5.1% in Q4 with risks broadly balanced,” Mr. Das said.
Earlier, the central bank had projected retail inflation at 5.2% for the 2021 March quarter.
RBI has the mandate to keep inflation at 4% with a bias of plus or minus 2%.
