RBI Projects 4.5% Retail Inflation For FY 2024-25
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The Reserve Bank of India (RBI) today announced its projections for retail inflation, forecasting a rate of 4.5% for the financial year 2024-25. This projection is contingent on normal monsoon conditions and stable supply chains.
According to RBI Governor Shaktikanta Das, the Consumer Price Index (CPI) inflation rates for FY 2024-25 are projected to be 4.1% in Q2, 4.8% in Q3, 4.2% in Q4, and 4.3% in Q1 of FY 2025-26.
Despite the US Federal Reserve’s recent 50 basis points rate cut, the RBI maintained its status quo on repo rates. The central bank also shifted its policy stance from “withdrawal of accommodation” to “neutral,” indicating a more balanced approach towards managing inflation while supporting economic growth.
Governor Das highlighted several factors affecting the inflation landscape, including food inflation, which is expected to decrease later in the fiscal year due to a strong monsoon and adequate buffer stocks of essential commodities. However, he warned of a potential spike in retail inflation for September due to unfavorable base effects and rising food prices.
Das noted that macroeconomic indicators for inflation and growth are currently balanced, with headline inflation on a downward trend. The government has tasked the RBI with maintaining CPI-based retail inflation at 4%, with a permissible margin of 2 percentage points on either side.
The RBI’s projections and policy adjustments reflect a careful balancing act between controlling inflation and fostering economic growth. By keeping a keen eye on economic indicators, the RBI aims to ensure a stable financial environment conducive to growth while adhering to its inflation targets.
