RBI Governor Shaktikanta Das said the Reserve Bank of India (RBI) is laser-focused to bring retail inflation back to four per cent in a non-disruptive manner, according to the minutes of the October Monetary Policy Meeting (MPC). Issued today.
The central bank has been mandated by the government to ensure that consumer price index (CPI) based inflation is at 4 per cent, with a band of two per cent on either side. Retail inflation – which was above 6 per cent during May and June, has now started going down and has come down to 4.35 per cent in September 2021.
“Going forward, if there is no unseasonal rains, food inflation is likely to record significant moderation in the immediate term, aided by record kharif production, more than adequate food stocks, supply-side measures and favorable base effects,” RBI Governor said.
Volatile crude oil prices, particularly the resurgence since mid-September, are pushing pump prices to new highs, increasing the risk of further spillover of higher transportation costs into retail prices of goods and services. They said.
In its meeting in August 2021, the RBI panel was faced with challenges by headline inflation exceeding the upper tolerance limit for the second consecutive month. The softer-than-expected inflation in July and August this year, especially in August, was on account of a significant moderation in the pace of food prices.
“The inflation trajectory is uneven, sluggish and likely to stall,” RBI Deputy Governor Michael Patra said.
“Inflation estimates have happily outperformed actual results in the form of a decline in food inflation.
Inflation formation is being impacted by repeated shocks, which have taken fuel inflation to an all-time high and core inflation remains persistent, with risks,” Mr Patra said.