Despite crude oil prices rising over $90 per barrel, the Reserve Bank of India (RBI) has projected lower retail inflation level of 4.5 per cent in the next fiscal, 2022-23, as against the inflation forecast of 5.3 per cent for 2021-22.
“The CPI (consumer price) inflation trajectory has moved in close alignment with our projections. In particular, the softening of food prices is providing welcome relief,” RBI Governor Shaktikanta Das said while unveiling the monetary policy. The improving prospects for foodgrain production and the expected easing of vegetable prices on fresh winter crop arrivals are adding further optimism, he said. The RBI’s policy objective is to target a CPI inflation of 4 per cent within a band of plus or minus 2 per cent. 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, it said. “The hardening of crude oil prices, however, presents a major upside risk to the inflation outlook,” Das said.