Earlier, the central bank had estimated retail inflation at 5.2% for the 2021 March quarter.
The Reserve Bank on Wednesday said it expects retail inflation to be 5.2% in the first half of the current financial year and the target has been revised to 5% for the quarter ended March.
While the headline inflation of 5% in February 2021 remains within the tolerance band, some of the underlined components are testing the upper tolerance level. RBI Governor Shaktikanta Das, while announcing the first monetary policy for the current financial year, on Wednesday said that going ahead, food inflation will severely depend on the temporary and special progress of the Southwest Monsoon.
The Reserve Bank of India (RBI) has kept the key repo rate unchanged at 4% to support growth in the current situation.
Shri Das said that there has been some relief from the incidents of domestic taxes on petroleum products through coordinated actions by the Center and the States.
However, a combination of international commodity prices and logistic costs may increase input price pressures on manufacturing and services.
“Keeping all these factors in mind, CPI inflation has been revised upwards to 5% in Q4 of FY15; 5.2% in Q1 FY2021-22; 5.2% in the second quarter of FY22 as well; 4.4% in Q3 and 5.1% in Q4 is roughly balanced, ”said Mr. Das.
Earlier, the central bank had estimated retail inflation at 5.2% for the 2021 March quarter.
The RBI has an order to keep inflation above 4% or with a bias of 2%.
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