Even as inflation in the country is on the higher side amid high vegetable prices and pressure on companies for rising input costs, the Reserve Bank of India (RBI) will revise its inflation projections for the period going forward. The revised numbers will give an idea of the direction inflation is going.
In a recent interview with CNBC-TV18, RBI Governor Shaktikanta Das said, “We are on the drawing table reworking the (inflation) numbers and we will give out the numbers in the next MPC scheduled in the first week of June.”
In the April MPC meet, the Reserve Bank of India (RBI) revised upwards its retail inflation forecast to 5.7 per cent for the current financial year 2022-23, as compared with the 4.5 per cent projected earlier. The retail inflation in April stood at an eight-year high of 7.79 per cent, forcing the RBI to hike interest rates in an off-cycle monetary policy in May.
On asked about the recent CNBC Poll that suggested inflation not to come below the 6 per cent level before the fourth quarter of the current financial year, he said, “October is still quite a distance away. Let’s not speculate now… There could be other actions also in the intervening periods. I cannot give a number today because we are working on it right now. We can only say in the June MPC as to what will be the inflation projection going forward.”
The six-member Monetary Policy Committee (MPC) is going to meet during June 6-8 to decide on the interest rates in the country. The policy decision will be announced on the last day of the meeting, June 8.
In its annual report released last week, the central bank said the trajectory of inflation going forward is subject to considerable uncertainty and would primarily depend on the evolving geopolitical situation. It added that sharp movements in global commodity prices are having a significant bearing on food inflation dynamics in India.
“Though record foodgrains production and forecast of a normal south-west monsoon augurs well for food inflation, heightened uncertainty around global food prices arising from geopolitical risks might offset these positive domestic impulses, especially via elevated prices of wheat, edible oil, feed costs and key agriculture inputs like fertilisers,” according to the RBI’s Annual Report 2021-22.
It also said supply shocks impacted food inflation intermittently, exacerbated by imported price pressures, especially from global edible oil prices. Crude oil prices pushed up core inflation later in the year. “This experience also highlighted the important role of supply-side measures by the government in relieving price pressures in the case of edible oils and pulses, and in softening the pass-through of the sharp increase in global crude oil prices to domestic pump prices of petrol and diesel through timely reductions in excise duties and state-level value-added taxes (VATs).”
The retail inflation, based on the Consumer Price Index (CPI), in April soared to an eight-year high of 7.79 per cent, compared with 4.23 per cent in April 2021 and 6.97 per cent in March 2022. Food inflation also jumped to 8.38 per cent in April, from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.
Recently, in May, prices of major vegetables soared, with the lemon rate reaching as high as Rs 250 in Delhi.Other vegetable prices also witnessed price hikes.
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