RBI marginally lowers FY24 inflation projection to 5.1%

The Reserve Bank of India on Thursday marginally lowered its inflation projection for the current financial year to 5.1 per cent, as Governor Shaktikanta Das said the central bank's monetary policy actions are yielding the desired results.

In April, the Reserve Bank had estimated the consumer price index (CPI) based retail inflation at 5.2 per cent during the fiscal 2023-24.

CPI inflation fell sharply to 4.7 per cent in April 2023, from 6.4 per cent in February, on the back of favourable base effects, with softening observed across all the three major groups.

"In India, consumer price inflation eased during March-April 2023 and moved into the tolerance band (2-6 per cent), declining from 6.7 per cent in 2022-23.

"Headline inflation, however, is still above the target as per the latest data and is expected to remain so according to our projections for 2023-24," Das said while announcing the second bi-monthly monetary policy of 2023-24.

Therefore, close and continued vigil on the evolving inflation outlook is absolutely necessary, especially as the monsoon outlook and the impact of El Nino remain uncertain, he said.

The Reserve Bank of India (RBI) has projected the CPI inflation at 5.1 per cent for 2023-24 -- Q1 at 4.6 per cent, Q2 at 5.2 per cent, Q3 at 5.4 per cent and Q4 at 5.2 per cent -- with risks evenly balanced.

"At the same time, given the uncertainties, we need to maintain "Arjuna's eye" on the evolving inflation scenario. Let me re-emphasise that headline inflation still remains above the target and being within the tolerance band is not enough.

"Our goal is to achieve the target of 4.0 per cent, going forward," the Governor said.

He also stressed that the Monetary Policy Committee will take further monetary actions promptly and appropriately as required to keep inflation expectations firmly anchored and bring down inflation to the target level.