May need to do extra to tame inflation: RBI

Mumbai: “We have to stand in readi - ness to go beyond keeping Arjuna’s eye to deploying policy instruments, if necessary” to contain inflation, said Reserve Bank Governor Shaktikanta Das on Thursday.

Headline consumer price index-based inflation projection for the second quarter of 2023-24 has been revised up substantially, primarily due to the price shock from vegetables, at 6.2 per cent by the RBI form 5.2 per cent estimated in June.

Unveiling the bi-monthly monetary policy, Governor Das said the moderation in headline inflation to 4.6 per cent in the first quarter of 2023-24 was in line with the projections set out in the June MPC meeting. There was a pick-up in headline inflation to 4.8 per cent in June due to an upturn in food inflation.

“Going by the past trends, vegetable prices may see a significant correction after a few months. The prospects of kharif crops have brightened, thanks to improvement in the progress of the monsoon,” he said.

Uncertainties, however, remain on domestic food price outlook due to sudden weather events and possible El Niño conditions in August and beyond, he added.

“Assessment of the future trajectory of inflation is a continuous process. We have a choice to modify our inflation projections in every meeting of MPC, if warranted, in the interest of better guidance; or avoid frequent changes and revise them only on fewer occasions for simplicity of presentation,” Das said.

Given the continuing uncertainties, the RBI’s latest CPI inflation projections for 2023-24, assuming a normal monsoon, is revised to 5.4 per cent, he said. The estimate in June was 5.1 per cent. (PTI)