Prices of essential food items force RBI to raise inflation projection
Meat, fish, eggs, vegetables, pulses, and spices are the six essential food articles consistently exerting upward pressure on the Consumer Price Index (CPI) or retail inflation and RBI.
While much attention has been concentrated on the unstable prices of vegetables or tomatoes, recent months have seen a considerable surge in the prices of spices, closely followed by pulses.
Over the previous year, there has been a sustained upward course in meat, fish, and egg prices.
These food articles have over 15 per cent weight in the inflation area. The whole food basket has a 45 per cent weightage in the CPI index.
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These high price levels significantly influence the Reserve Bank of India’s (RBI) calculation of inflation forecasts for the present year. Today’s monetary policy, the RBI, has changed its June inflation prediction from 5.1 to 5.4 per cent for the fiscal year 2023-24.
The revised figures now show an inflation rate of 6.2 per cent (5.2 per cent projected earlier) for the second quarter, 5.7 per cent (5.4 per cent ) for the third quarter, and 5.2 per cent for the fourth quarter as before. “Headline inflation projection for the second quarter of the current year has been revised substantially, primarily due to the price shock from vegetables,” stated RBI Governor Shaktikanta Das.
The Governor even repeated that the RBI must remain firmly concentrated on aligning inflation to the target of 4.0 per cent.
