The Reserve Bank of India (RBI) on Friday projected consumer price index (CPI) inflation at 5.7 per cent during 2021-22.
It said CPI inflation is expected at 5.9 per cent in Q2, 5.3 per cent in Q3 and 5.8 per cent in Q4 of 2021-22 with risks broadly balanced.
CPI inflation for Q1:2022-23 is projected at 5.1 per cent, said RBI Governor Shaktikanta Das.
The revival of south-west monsoon and the pick-up in kharif sowing, buffered by adequate food stocks should help to control cereal price pressures.
"High frequency indicators suggest some softening of price pressures in edible oils and pulses in July in response to supply side interventions by the government," said Das.
"Input prices are rising across manufacturing and services sectors, but weak demand and efforts towards cost cutting are tempering the pass-through to output prices."
Das said with crude oil prices at elevated levels, a calibrated reduction of the indirect tax component of pump prices by the Centre and states can help to substantially lessen cost pressures.
According to RBI, headline CPI inflation plateaued at 6.3 per cent in June after having risen by 207 basis points in May 2021. Food inflation increased in June primarily due to an uptick in inflation in edible oils, pulses, eggs, milk and prepared meals and a pick-up in vegetable prices.
Fuel inflation moved into double digits during May and June as inflation in LPG, kerosene, and firewood and chips surged.
After rising sharply to 6.6 per cent in May, core inflation moderated to 6.1 per cent in June, driven by softening of inflation in housing, health, transport and communication, recreation and amusement, footwear, pan, tobacco and other intoxicants (as the effects of the one-off post-lockdown taxes imposed a year ago waned), and personal care and effects (due to sharp reduction in inflation in gold).
Domestic economic activity is starting to recover with the ebbing of the second wave. Looking ahead, agricultural production and rural demand are expected to remain resilient.
( With inputs from ANI )
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