Retail Inflation for FY25 projected at 4.5 pc, food inflation to drop later in year: RBI Governor

Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said that retail inflation for the current fiscal (FY25) is projected at 4.5 per cent due to healthy monsoon and sound supply conditions.

Addressing the Monetary Policy Committee (MPC) meeting here, Das said that food inflation is likely to decrease later in the year, supported by a solid stock of essential commodities.

The RBI MPC projected Consumer Price Index (CPI) inflation for FY25 at 4.5 per cent, with quarterly estimates of 4.1 per cent for Q2, 4.8 per cent for Q3, and 4.2 per cent for Q4.

“Food inflation could see some easing later in this fiscal on the back of strong kharif sowing, adequate buffers and good soil conditions,” said Das, adding that this would help stabilise food prices and ease inflationary pressures in the economy.

“Retail inflation in September is likely to see a jump due to an unfavourable base, pick up in food price momentum. The Inflation horse has been brought to the stable within the tolerance band. Have to be careful about opening the gate,” said the RBI Governor.

Das further stated that macroeconomic parameters of inflation and growth are well balanced, headline inflation is on a downward trajectory, though its pace has been slow and uneven.

The RBI is tasked with maintaining the CPI-based retail inflation at 4 per cent.

CPI inflation came in below the RBI’s target for the second consecutive month in August, “although in light of the recent experience, food price volatility remains a contingent risk”.

The year-on-year inflation rate (3.65 per cent), based on the All India Consumer Price Index (CPI), for the month of August was the second lowest in the last five years, below the RBI’s 4 per cent inflation target.

Meanwhile, household consumption is poised to grow faster in the second quarter of the current fiscal (FY25) as headline inflation eases, with a revival of rural demand already taking hold.

(With inputs from IANS)