The retail inflation is expected to range tightly between 5 percent and 5.6 percent if the country manages to successfully deal with the El Niño event, the Reserve Bank of India (RBI) bulletin has said.
“Over the financial year ahead (2023-24), inflation is expected to range tightly between 5.0 and 5.6 percent if India survives an El Niño event adversely affecting the southwest monsoon, given global uncertainties,” the bulletin said on March 21.
The RBI's bulletin is a monthly publication that gives insights into the economic developments in India and abroad.
India's headline retail inflation rate edged down to 6.44 percent in February from a three-month high of 6.52 percent recorded in January, data released by the ministry of statistics and programme implementation showed.
The moderation in headline inflation by 8 basis points (bps) between January and February was driven by a favourable base effect of 24 bps, which more than offset the positive momentum of 17 bps, the bulletin noted.
One basis point is one-hundredth of a percentage point.
During the month, prices increased month-on-month (m-o-m) by 41 bps in the core category and by 5 bps in the fuel group, whereas the food and beverages group recorded a negative momentum of 6 bps.
The marginal easing of headline inflation, however, was driven by moderation in y-o-y inflation within the fuel, and core (excluding food and fuel) categories.
The bulletin also said that the core inflation continues to defy the distinct softening of input costs.
RBI Governor Shaktikanta Das in the February monetary policy projected average inflation at 5.3 percent for 2023-24 on the assumption of a normal monsoon -- in Q1 at 5.0 percent, Q2 at 5.4 percent, Q3 at 5.4 percent and Q4 at 5.6 percent.
On February 9, the US National Oceanic and Atmospheric Administration (NOAA) had forecast the possibility of El Niño, which is known to have a negative impact on the monsoon system, over the tropical eastern Pacific after three straight La Niña years.
According to India Meteorological Department officials El Niño is a major parameter for the monsoon and there have been instances of below-normal or normal rain during El Niño years.
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