RBI lowers inflation projection to 2-3.5 pc in H1 FY18


Team Udayavani, Jun 7, 2017, 4:06 PM IST

Mumbai: RBI expects retail inflation to fall to 2-3.5 per cent in the first half of current fiscal and move up to 4.5 per cent in the second half saying that rush for farm loan waivers may have inflationary spillovers.

The abrupt and significant retreat of inflation in April from the firming trajectory that was developing in February and March has raised several issues that have to be factored into the inflation projections, it said.

In its second Bi-monthly Monetary Policy Statement of 2017-18, the Reserve Bank said the prices of pulses are clearly reeling under the impact of a supply glut caused by record output and imports.

“Policy interventions, including access to open trade, may be envisaged to arrest the slump in prices,” it said.

The easing of inflation excluding food and fuel may be transient in view of its underlying stickiness in a situation of rising rural wage growth and strong consumption demand, it said.

“If the configurations evident in April are sustained, then absent policy interventions, headline inflation is projected in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half,” it said.

The earlier projection for the retail inflation in first half of the fiscal was 4.5 per cent and 5 per cent in second half.

It further said risks are evenly balanced, although the spatial and temporal distribution of the monsoon and the government staying the course in effective food management will play a critical role in the evolution of risks.

“The risk of fiscal slippages, which, by and large, can entail inflationary spillovers, has risen with the announcements of large farm loan waivers,” said the RBI’s resolution released after the fifth meeting of Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel.

RBI said global political and financial risks materialising into imported inflation and the disbursement of allowances under the 7th central pay commission’s award are upside risks.

However, the central bank said the implementation of the Goods and Services Tax (GST) is not expected to have a material impact on overall.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

SC notice to Karnataka, DK Shivakumar on CBI plea against withdrawal of consent by state govt

Will remain active in politics till my last breath: JD(S) patriarch & ex-PM Deve Gowda

BJP calls Congress govt ‘laughing stock’ as ‘samosa politics’ heats up in Himachal

Chikkaballapur: Yoga teacher feigns death by holding her breath, escapes murder bid

World Bunts Summit to be held in Mumbai on December 7

SC dismisses PIL seeking CBI probe into Tirupati laddus row

Salman Khan gets another threat; message sent to Mumbai traffic police helpline

Related Articles More

Akhilesh Yadav attacks BJP on demonetisation anniversary

DeMo paved way for monopolies by devastating MSMEs, informal sector: Rahul on note ban anniversary

Comply with order allowing minority student to attend St Stephen’s College: HC tells DU

INDIA bloc looted, destroyed Jharkhand: Dharmendra Pradhan

Gujarat family holds burial event for ‘lucky’ car; 1,500 people attend

MUST WATCH

Gho Pooja in Deepavali Festival

Melukote Deepavali

Ganapathi Co-operative Society Ltd

Udayavani Chinnara Banna 2024

Annapoorna Aahar | Food Places In Mysore


Latest Additions

Akhilesh Yadav attacks BJP on demonetisation anniversary

SC notice to Karnataka, DK Shivakumar on CBI plea against withdrawal of consent by state govt

DeMo paved way for monopolies by devastating MSMEs, informal sector: Rahul on note ban anniversary

Will remain active in politics till my last breath: JD(S) patriarch & ex-PM Deve Gowda

Comply with order allowing minority student to attend St Stephen’s College: HC tells DU

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.