RBI sees inflation at 5% next fiscal

Mumbai: Retail inflation is likely to ease to around five per cent next fiscal on the back of government measures to ease supplies, reduction in fuel prices as well as prospects of good crops, the Reserve Bank of India said on Wednesday.

For the current fiscal year to be ending on March 31, 2022, retail inflation is expected to be around 5.3 per cent, the RBI said. The reduction of excise duty and VAT on petrol and diesel will bring about a durable reduction in inflation by way of direct effects as well as indirect effects operating through fuel and transportation costs, RBI Governor Shaktikanta Das said while announcing its bi-monthly policy decision. "The inflation trajectory is likely to be in line with our earlier projections, and price pressures may persist in the immediate term.

Vegetable prices are expected to see a seasonal correction with winter arrivals in view of bright prospects for the rabi crop. "Cost-push pressures continue to impinge on core inflation, though their pass-through may remain muted due to the slack in the economy," Das said. Taking into consideration all these factors, CPI inflation is projected at 5.3 per cent for 2021-22: 5.1 per cent in Q3; 5.7 per cent in Q4 of 2021-22, with risks broadly balanced, the RBI Governor said in his policy statement.