The country’s Monetary Policy Committee (MPC) has underlined the need to keep a close watch on the upside risk to inflation emanating from uncertainty over food prices, according to the minutes of the December meeting which were released on Friday.
MPC member Shashank Bhide flagged concern over food inflation which has remained above 6 per cent.
He pointed out that the impact of the unfavourable rainfall conditions during the monsoon season this year has meant a likelihood of weak kharif harvest for some of the main crops with implications for food inflation.
Considering a range of factors influencing the inflation pattern in the short-term, the headline inflation is projected at 5.6 per cent and 5.2 per cent in Q3 and Q4, 2023-24, respectively, and 5.2 per cent in Q1, 2024-25, followed by 4 per cent in Q2 and 4.7 per cent in Q3, the minutes of the MPC meeting stated.
Retail inflation rose 5.55 per cent in November, its fastest pace in three months, fuelled by higher food prices.
“On the growth front, the economy is running at full steam and the best way monetary policy can support this high growth trajectory is by maintaining its commitment to price stability,” according to RBI official Rajiv Ranjan.
The MPC comprises three RBI members and three external members. It had kept the repo rate unchanged at 6.50 per cent for the fifth consecutive meeting in December.
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