FM Nirmala Sitharaman: RBI to take necessary actions to keep inflation within anticipated ranges

By: WE Staff | Monday, 20 February 2023

Finance Minister Nirmala Sitharaman stated at a post-budget industry event in Jaipur that the Reserve Bank of India (RBI) will take the necessary actions to maintain inflation within "expected bounds."

"Each country's condition in emerging markets is different. I believe the RBI is keeping an eye on the Indian economy and making decisions as and when they are needed,” said Nirmala Sitharaman.

The consumer price index (CPI), often known as retail inflation, in India rose to a three-month high in January, according to official statistics issued earlier in February, and after a two-month pause, it once again above the RBI's upper tolerance level of 6%. In January, core inflation, which eliminates food and fuel, remained over 6% at 6.2%.

Since January 2022, retail inflation has consistently exceeded the Reserve Bank of India's upper tolerance limit of 6%, with the notable exception of November and December 2022. Retail inflation measured by the Consumer Price Index (CPI) was 5.72% in December and 6.02% in January 2022. The previous peak, at 6.77%, happened in October.

The central bank's predictions state that retail inflation will be 6.5% in FY23 rather than 6.7%, and 5.3% in FY24. The RBI heavily relies on retail inflation to determine its monetary policy.

"The picture for the world economy is less bleak than it was a few months ago; earnings growth in big economies have improved, and inflation is declining, though it is still far above the target in key economies. Core inflation has not changed. Non-food credit growth had increased by 16.7% as of January 27, 2023, over the previous equivalent period. We must keep up our consistent efforts to lower the CPI, RBI Governor Shaktikanta Das said during the February policy meeting.