Retail inflation expected to ease to 5% in next fiscal

Mumbai: Retail inflation is likely to ease to around 5 per cent next fiscal on the back of government measures to ease supplies, reduction in fuel prices and prospects of good crops, the Reserve Bank of India said on Wednesday.

For the current fiscal year to be ending on March 31, 2022, retail inflation is expected to be around 5.3 per cent, the RBI said.

"The inflation trajectory is likely to be in line with our earlier projections, and price pressures may persist in the immediate term. Vegetable prices are expected to see a seasonal correction with winter arrivals in view of bright prospects for the rabi crop. Cost-push pressures continue to impinge on core inflation, though their pass-through may remain muted due to the slack in the economy," Das said.

Taking into consideration all these factors, CPI inflation is projected at 5.3 per cent for 2021-22; 5.1 per cent in Q3; 5.7 per cent in Q4 of 2021-22, with risks broadly balanced, the RBI Governor said in his policy statement.

CPI inflation is then expected to ease to 5 per cent in Q1 FY2022-23 and stay at 5 per cent in Q2 as well, Das added.

The Reserve Bank has kept the repo rate -- at which it lends money to the banks-- unchanged at 4 per cent for the 9th time in a row, committed to continue supporting economic growth amid uncertainty over the impact of the Omicron strain of the coronavirus on the economy.