RBI not maintaining price mandate as inflation remained above 2-6% for third consecutive quarter

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New Delhi: The Reserve Bank of India (RBI) has fallen short of its price-setting mandate, with the latest consumer price index (CPI) inflation for September confirming a third consecutive quarter in which average inflation has remained above the tolerance level of 2-6 percent.

Data from the Ministry of Statistics and Program Implementation showed that headline retail inflation rose from 7.00% in August to 7.41% in September.

The September CPI inflation rate of 7.41 percent is slightly higher than the consensus forecast. According to a survey by Moneycontrol, CPI inflation was expected to rise to 7.3%.

Inflation, as measured by the CPI, averaged 6.3% from January to March, 7.3% from April to June and is now 7% from July to September.

Under the law, the RBI must now submit a report to the federal government explaining why it failed, the corrective measures it plans to take and the timeframe for bringing inflation back to target.

Governor Shaktikanta Das had stated that the Monetary Policy Committee (MPC) would meet to consider the RBI’s report to the government during the post-policy press conference on September 30.

“Therefore, what we will write, I will not say. But as I said earlier, we expect inflation to come down close to the target over a two-year cycle, that was our expectation earlier and even now,” Das added.

According to the RBI’s latest prediction, CPI inflation is expected to average 6.7 percent in FY23 before falling to 5.2 percent in FY24.

As expected, rising food costs were the main cause of the rise in inflation in September, which rose to 8.6 percent from 7.62 percent in August.

The food inflation rate of 8.6% in September is the highest in the last 22 months.



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