Mumbai, Feb 10 (SocialNews.XYZ) India's FY23 retail inflation is projected at 4.5 per cent, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Thursday.
Besides, inflation projection for 2021-22 is retained at 5.3 per cent, with Q4FY22 at 5.7 per cent on account of unfavourable base effects that are expected to ease subsequently.
In his policy statement post the Monetary Policy Committee's bi-monthly meeting, Das said: "The CPI reading for January 2022 is expected to move closer to the upper tolerance band, largely due to adverse base effects.
"Taking all these factors into consideration and on the assumption of a normal monsoon, CPI inflation for 2022-23 is projected at 4.5 per cent with Q1:2022-23 at 4.9 per cent; Q2 at 5.0 per cent; Q3 at 4.0 per cent; and Q4 at 4.2 per cent, with risks broadly balanced."
The Governor said that the CPI inflation trajectory has moved in close alignment with the RBI's projections.
"In particular, the softening of food prices is providing welcome relief. The improving prospects for foodgrains production and the expected easing of vegetable prices on fresh winter crop arrivals are adding further optimism.
"Moreover, the softening of pulses and edible oil prices is likely to continue in response to strong supply side interventions by the Government and increase in domestic production."
However, Das pointed out that hardening of crude oil prices presents a major upside risk to the inflation outlook.
"Core inflation remains elevated at tolerance testing levels, although the continuing pass through of tax cuts relating to petrol and diesel last November would help to moderate input cost pressures to some extent.
"The transmission of input cost pressures to selling prices remains muted in view of the continuing slack in demand. Further, as risks from Omicron wane and supply chain pressures moderate, there could be some softening of core inflation."
On Thursday, the RBI retained its key short-term lending rates during the sixth and final monetary policy review of FY22. The growth-oriented accommodative stance was also retained to give a push to economic activity.
Additionally, the RBI's Monetary Policy Committee (MPC) maintained the repo rate, or short-term lending rate, for commercial banks, at 4 per cent.
Das said that at the current juncture, the conduct of domestic monetary policy is primarily attuned to the evolving inflation and growth dynamics.
"We remain watchful of spillovers from the uncertain global developments and divergent monetary policy responses.
"Our monetary policy would continue to be guided by its primary mandate of price stability over the medium term, while also ensuring a strong and sustained economic recovery."
Source: IANS
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