RBI Raises Inflation Forecast To 6.7% For 2022-23, Above Its Target

Reserve Bank of India (RBI) on Wednesday raised its inflation forecast for the current fiscal to 6.7 per cent due to prevailing geo-political tensions which have fuelled inflationary pressures.

RBI Governor Shaktikanta Das said after the meeting of the central bank's monetary policy committee (MPC), that inflation is likely to remain above 6 per cent in first three quarters of current fiscal.

In April, MPC had kept the retail inflation forecast for the current fiscal year at 5.7 per cent.

"Upside risk to inflation persists as recent spike in tomato, crude prices is fuelling inflation," Mr Das said in his speech after the MPC meeting.

The upward revision in inflation projection has been made in the wake of retail inflation remaining above RBI's tolerance level of 6 per cent for four months in a row.

Geo-political tensions which have risen due to the ongoing Russia-Ukraine war, have impacted commodity prices.

"Protracted war and sanctions have kept global commodity prices high," Mr Das said in his speech.

He further added that the war is turning out to be a dampener for global trade.

Subsequently the MPC, while rising the inflation projection to 6.7 per cent for the current fiscal, projected the inflation to be at 7.5 in first quarter of the current fiscal. For the second quarter, it is expected to be at 7.4 per cent, while for the third quarter it is to be at 6.2 per cent. However in the fourth quarter, it is expected to further come down to 5.8 per cent.