RBI raises H1FY20 consumer inflation estimate to 3-3.1% from 2.9-3%

The Monetary Policy Committee (MPC), in its second bi-monthly policy decision of this fiscal, has changed the Inflation projection. The H1FY20 CPI inflation estimate has been increased To 3-3.1 percent From 2.9-3 percent. The H2FY20 CPI inflation estimate has been revised To 3.4-3.7 percent From 3.5-3.8 percent.

The CPI rates for the month of April were at 2.92 percent, which were unchanged from March because of higher inflation in food and fuel groups being offset by lower inflation in items excluding food and fuel. Food inflation rose from 0.7 percent to 1.4 percent in the month of April while the fuel inflation rose to 2.6 percent in April from February 1.2 percent.

The CPI inflation excluding food and fuel went down to 4.5 percent from 5.1 percent in the month of March. It is the biggest fall since April 2017.

The Reserve Bank of India cut the repo rate by 25 bps, from 6 percent to 5.75 percent, in the June MPC meet. The GDP projection for 2019-20 is kept at 7 percent from the previous 7.2 percent.