RBI projects 6.8 per cent retail inflation in December quarter

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The Reserve Bank of India on Friday said retail inflation is likely to remain elevated and pegged it at 6.8 per cent for the third quarter of the current fiscal. RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) is of the view that inflation is likely to remain elevated, barring transient relief in the winter months from prices of perishables.

However, retail inflation is projected to be 5.8 per cent in the fourth quarter of 2020-21.

CPI inflation rose sharply to 7.3 per cent in September and further to 7.6 per cent in October, RBI Governor Shaktikanta Das said while unveiling its bi-monthly monetary policy review.

According to him, with some evidence that price pressures are spreading, the outlook for inflation has turned adverse in relation to expectation in the last two months.

"While cereal prices may continue to soften with the bumper kharif harvest arrivals and vegetable prices may ease with winter crop, other food prices are likely to persist at elevated levels. Cost push pressures continue to impinge on core inflation which could remain sticky.

"Taking into consideration all these factors, the CPI inflation is projected at 6.8 per cent for Q3 FY2020-21; 5.8 per cent for Q4 FY2020-21 and 5.2-4.6 per cent in H1 of FY2021-22 with risks broadly balanced," Das said.

The MPC has kept the key policy or the repo rate unchanged at 4 per cent with an accommodative stance to support growth and rein in inflationary pressures.

"Our paramount objective is to support growth while ensuring that financial stability is maintained and preserved at all times," Das said.

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