RBI projects retail inflation at 5.1 pc in FY22 on supply-side measures

Mumbai: The Reserve Bank of India on Friday said  it expects retail inflation to be at 5.1 per cent in the current  financial year supported by the progress of monsoon and effective supply-side interventions by the Government.

The projection is well within the Monetary Policy Committee’s target to keep the rate of inflation at 4 per cent with an upper or lower tolerance level of 2 per cent.

However, the apex bank remained equally cautious about the upside risks due to rising global commodity prices.

Moreover, the persistence of the second wave of the pandemic and the consequent restrictions on activity on a virtually pan-India basis puts upside risks to inflation, RBI observed in its monetary policy



review.

Presenting the second bi-monthly monetary policy review.

RBI Governor  Shaktikanta Das announced that the key repo rate - the short-term lending rates to banks - will be kept unchanged at 4 per cent.

The favourable base effects that brought about moderation in headline inflation by 1.2 percentage points in April, may persist through the first half of the year, conditioned by the “progress of the monsoon and effective supply-side interventions by the Government”, Das said.

Taking into consideration the measures taken so far as well as the upside risks, Das said the CPI (Consumer Price Index) inflation is projected at 5.1 per cent during 2021-22.