Retail inflation projects 4.5 pc in FY2023: RBI

The Reserve Bank of India said on Thursday that inflation based on the consumer price index (CPI) is expected to fall well below its upper tolerance level of 4.5 percent in the fiscal year beginning April 2022, thanks to improved fresh crop arrivals, supply-side interventions, and the prospect of a good monsoon. Global crude oil prices, on the other hand, may be unreliable.

The Reserve Bank of India (RBI) kept its inflation forecast for the current fiscal year at 5.3 percent.

Core inflation is elevated at tolerance-testing levels, according to RBI Governor Shaktikanta Das, who announced the last monetary policy for the current fiscal year. Although, he said, the continued pass-through of tax cuts for gasoline and diesel, which began in November, would assist to alleviate input cost pressures to some extent. The Reserve Bank of India keeps a careful eye on CPI inflation when deciding on its bi-monthly monetary policy.

In December, retail inflation surged to a five-month high of 5.59 percent, up from 4.91 percent in November, owing primarily to an increase in food costs.

The MPC has been given the task of keeping annual inflation at 4 percent through March 31, 2026, with a maximum tolerance of 6 percent and a minimum tolerance of 2 percent. To stimulate growth while also managing inflationary pressures, the Reserve Bank has kept its benchmark repo rate, which it provides short-term money to banks, at 4 percent for the tenth time in a row.

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