‘Tough control on inflation is necessary”, Das on price rise after MPC
New Delhi| The festive season has started, on the other hand the common man is troubled by inflation. A big increase has been seen in the prices of food items during the last few months. After the MPC meeting, Reserve Bank of India Governor Shaktikanta Das also commented on inflation. After the monetary review to be held at a gap of two months, Governor Das said on Wednesday that the central bank will have to keep a close watch on inflation and put a strict control on it, otherwise it may increase again.
The Reserve Bank of India (RBI) on Wednesday maintained its retail inflation forecast for the current fiscal year 2024-25 at 4.5 percent. Das said after the MPC meeting that the Flexible Inflation Target (FIT) framework has completed eight years since it was implemented in 2016 and is a major structural reform undertaken in the 21st century in India. According to Das, the central bank has ensured under the FIT that the consumer price index (CPI) based retail inflation rate remains at four percent with two percent fluctuations. The RBI has maintained its consumer price index based inflation estimate for 2024-25 at 4.5 per cent. Inflation is projected to be 4.1 percent in the second quarter, 4.8 percent in the third quarter and 4.2 percent in the fourth quarter. Inflation is projected at 4.3 percent for the first quarter of FY 2025-26. Risks are equally balanced.
Das said, ‘‘ adverse base effect and rise in food prices may lead to rise in inflation rate in September. The decrease in the production of onion, potato and chana dal in 2023-24, among other factors, will be the major reason.’’ However, Das said that inflation may moderate in the fourth quarter of this year due to good monsoon, good Kharif crop, adequate stock of grains and expectation of better crop in the upcoming Rabi season. Das said there is also a risk of inflation going up in case of adverse weather and rising geopolitical tensions. There has been a lot of fluctuation in the price of crude oil at the international level in October. There has been a significant decline in retail inflation in July and August. Das said that despite the fear of a rise in food prices in the near term, the domestic price conditions indicate relief from inflation.
