The Reserve Bank of India (RBI) has revised CPI inflation to 5.2 per cent for January-March quarter of the current fiscal year. It has projected the CPI inflation in H1 FY22 to be 5.2-5.0 per cent, and for Q3 of FY22, the inflation may touch 4.3 per cent.
Conveying the outcome of the three-day MPC meet, RBI Governor Shaktikanta Das said the government would be reviewing the inflation target for the next five years. "The experience with successfully maintaining price stability and the gains in credibility for monetary policy since the institution of the inflation targeting framework, barring the COVID-19 period, needs to be reinforced in the coming years even as we exit the pandemic and seek to exploit the opportunities of the post-COVID world," he said.
The RBI has said inflation outturns in the last two months have turned out to be better than what was expected at the time of the December meeting. For the first time during the COVID-19 period, inflation has eased below the upper tolerance level of 6 per cent. "Going ahead, factors that could shape the food inflation trajectory in coming months, including the likely bumper kharif harvest arrivals in markets, rising prospects of a good rabi crop, larger winter supplies of key vegetables and softer poultry demand on fears of avian flu are all indicative of a stable near-term outlook," the RBI Governor.
After breaching the upper tolerance threshold continuously since June 2020, CPI inflation moved below 6 per cent in December for the first time in the post-lockdown period, supported by favourable base effects and a sharp fall in key vegetable prices.
The RBI governor said vegetable prices will remain soft in the near-term, while pressures may continue to persist in certain key food items. Outlook for core inflation is influenced by the escalation in cost-push pressures seen in recent months, he added.