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CPI inflation to remain 5.2% in Jan-March quarter, says RBI

Das says retail inflation has "returned within the tolerance band" of 4 per cent. RBI has the mandate to keep retail inflation at 4 per cent with a bias of plus/minus 2 per cent on either side

twitter-logoBusinessToday.In | February 5, 2021 | Updated 13:06 IST
CPI inflation to remain 5.2% in Jan-March quarter, says RBI
RBI sees around 5pc inflation in H1 next fiscal

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.

Also read: MPC meet: RBI lowers retail inflation forecast lowered to 5.2% in Q4FY21

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.

Also read: RBI MPC meet: Economic growth to only move upwards in FY21-22, says Shaktikanta Das

Also read: RBI MPC meet: GDP estimated to grow at 10.5% in FY22

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