Accordingly, inflation projection for 2022-23 has been raised to 5.7 per cent from an earlier estimation of 4.5 per cent

 

In his policy statement post the Monetary Policy Committee's (MPC) bi-monthly meeting, RBI Governor Shaktikanta Das said: "Taking into account these factors and on the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of $100 per barrel, inflation is now projected at 5.7 per cent in 2022-23, with Q1 at 6.3 per cent; Q2 at 5.8 per cent; Q3 at 5.4 per cent; and Q4 at 5.1 per cent."

 

The Governor said that the heightened geopolitical tensions since February end have upended the earlier narrative and considerably clouded the inflation outlook for the year.

 

"On the food price front, a likely record Rabi harvest would help to keep domestic prices of cereals and pulses in check. Global factors such as the loss of wheat supply from the Black Sea region and the unprecedented high international prices of wheat could, however, put a floor under domestic wheat prices.

 

"Edible oil price pressures are likely to remain elevated in the near-term due to export restrictions by key producers as well as loss of supply from the Black Sea region," he said.

 

Besides, the RBI Governor said that feed cost pressures could continue due to global supply shortages, which could also have a spillover impact on poultry, milk and dairy product prices.

 

On non-food items, he cited that the spike in international crude oil prices since February-end poses substantial upside risk to inflation through both direct and indirect effects.

 

"Sharp increase in domestic pump prices could trigger broad-based second round price pressures. A combination of high international commodity prices and elevated logistic disruptions could aggravate input costs across agriculture, manufacturing and services sectors.

 

"Their pass-through to retail prices, therefore, warrants continuous monitoring and pro-active supply management," he said.

 

On Friday, the RBI's MPC maintained the repo rate, or short-term lending rate, for commercial banks, at 4 per cent.

 

In addition, the growth-oriented accommodative stance was also retained