RBI kept inflation forecasts intact for FY24, inflation is expected to remain at 5.4 percent only

Reserve Bank of India (RBI) Governor Shaktikanta Das, while presenting the results taken at the MPC meeting today, has retained the inflation forecast for 2023-24 at 5.4 percent.

Apart from this, RBI also assured that timely adequate action will be taken to prevent any shock to global food and fuel prices.

Governor Shaktikanta Das said September's retail inflation figures may be lower than those of August and July. Overall inflation based on the Consumer Price Index (CPI) declined to 4.6 percent in the first quarter of 2023-24 from 7.3 percent in the same period a year ago.

RBI has projected CPI inflation to be at 5.4 percent for 2023-24. Talking quarter by quarter, RBI has estimated CPI inflation to be 6.4 percent in the second quarter, 5.6 percent in the third quarter, and 5.2 percent in the fourth quarter.

Whereas for the first quarter of the next financial year i.e. 2024-25, RBI has estimated CPI inflation to be 5.2 percent.

The RBI Governor said inflation is expected to moderate in the near term due to improvement in prices of vegetables, especially tomatoes, and a decline in LPG prices.

Apart from this, the moderation in inflation depends on various factors like El Nino, demand and supply, and Kharif crop yield.

While narrating the decisions of MPC today, Shaktikanta Das has maintained the GDP estimate for the current financial year at 6.5 percent. Apart from this, RBI has also kept the repo rate at 6.5 percent today.

This is the fourth consecutive time that RBI has kept the repo rate unchanged. The repo rate was last increased by 0.25 percent in February 2023. In fact, from May 2022, RBI has increased the repo rate to 6.5 percent till February 2023.