The Reserve Bank of India (RBI) remains laser-focused to bring back retail inflation to four per cent over a period of time in a non-disruptive manner, RBI Governor Shaktikanta Das said as per minutes of the October Monetary Policy Meeting (MPC) released today.
The central bank has been mandated by the government to ensure that the consumer price index (CPI) based inflation is at four per cent, with a band of two per cent on either side. Retail inflation - which was above six per cent during May and June, has now started moving down and stood at 4.35 per cent in September 2021.
''Going forward, if there are no spells of unseasonal rains, food inflation is likely to register significant moderation in the immediate term, aided by record kharif production, more than adequate food stocks, supply-side measures and favourable base effects,'' said the RBI Governor.
"Volatile crude oil prices, particularly the resurgence since mid-September, is pushing pump prices to new highs, raising risk of further spillover of high transportation cost into retail prices of goods and services," he added.
In its August 2021 meeting, the RBI panel was faced with challenges posed by the headline inflation exceeding the upper tolerance threshold for the second successive month. The more-than-expected softening of inflation in July and August this year was underpinned by the significant lowering in the food price momentum, especially in August.
''The trajectory of inflation likely to be uneven, sluggish and prone to interruption,'' said RBI Deputy Governor Michael Patra.
''The assessment of inflation has been happily overtaken by actual outcomes in the form of a decline in food inflation.
Formation of inflation is being buffeted by repeated shocks that have taken fuel inflation to an all-time high and turned core inflation persistent, with risks to the upside,'' added Mr Patra.