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Retail Inflation: The Reserve Bank tracks consumer inflation for formulating its monetary policy
Retail inflation rose 5.03 per cent in February 2021, owing to higher food and fuel prices, government data showed on Friday. This was higher than a recent poll conducted by news agency Reuters, which estimated that the retail inflation climbed 4.83 per cent in February from January’s 4.06 per cent. The food inflation — or inflation in the prices of food items last month rose from 1.96 per cent to 3.87 per cent. The Reuters poll was conducted between March 5-9 with over 50 economists. (Also Read: India’s Retail Inflation Probably Rose In February: Poll )
The minutes of the RBI Monetary Policy Committee’s February meeting showed that the members raised concerns about the upside risks to inflation, but the bank kept its repo rate at a record low 4.0 per cent, saying it would ensure ample liquidity.
Meanwhile, the central bank had projected the retail inflation at 5.2 per cent for the fourth quarter of the current fiscal, in its monetary policy announcement last month. The Monetary Policy Committee led by Reserve Bank of India Governor Shaktikanta Das, expected the gross domestic product (GDP) growth to be at 10.5 per cent in the next fiscal year, lower than the projections by Economic Survey and International Monetary Fund.
The Reserve Bank of India (RBI) tracks the retail inflation – or the rate of increase in consumer prices as determined by the Consumer Price Index (CPI). Separate government data showed that factory output contracted by 1.6 per cent in January.
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