The headline retail inflation, which declined to 4.7% in April, is likely to ease further this month, but there is no room for complacency as the prices may spike if El Nino leads to below-normal monsoon, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Wednesday.
“The situation is very dynamic and the war against inflation is not over, we have to remain alert, there is no cause for complacency,” Das said while addressing the annual session of the Confederation of Indian Industry (CII).
“We have to see how the El Nino factor, which is anticipated, will play out,” he added.
The RBI Governor expressed hope that the headline retail inflation in May would be lower than 4.7% recorded in April.
The Consumer Price Index (CPI) based retail inflation eased to an 18-months low of 4.7% in April from 5.66% in the previous month helped by moderation in food and fuel price, as per the government released earlier this month.
According to Das, the headline retail inflation is likely to remain within the RBI’s tolerance band of 2-6% for the third consecutive month in May.
The RBI Governor pointed out that the global inflationary pressures are showing signs of abatement, though they remain well above the target in most of the countries.
On interest rate action, Das said the course of monetary policy would depend upon the ground situation, which would determine whether the RBI would continue to maintain a pause in the rates.
"It's not in my hands. It all depends on the situation on the ground. I am driven by what's happening on the ground and what is the outlook on the ground,” he said.
The RBI Governor said the GDP growth number for 2022-23 is likely to be above 7%. The government has pegged the GDP growth for the financial year ended March 2023, at 7%. “It will not be a surprise if the GDP growth of last year comes slightly above 7%,” he said. For the current fiscal, he said the economic growth would be around 6.5%.
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