RBI gives first retail inflation forecast

Rising retail inflation hurting the common man has weighed heavily on the Reserve Bank of India which has for the first time given its forecast on consumer price inflation deviating from the trend. 

This is also for the first time that the central bank has not given any projection on wholesale price index. 

The retail inflation is likely to remain around or even above 9 per cent in the months ahead without policy action, the RBI said in its second quarter monetary policy review. 

In September, the CPI inflation was at a three-month high of 9.84 per cent, while WPI inflation was at a seven-month high of 6.46 per cent.

 The policy document, however, gave charts to project both CPI and WPI. Though the RBI has been maintaining that it looks at all inflation indicators, it has been using WPI for inflation projections in the past. 

Rajan also expressed concern over core CPI inflation, or price rise stripped of food and fuel, treading at 8.6 per cent, which, he said was not an acceptable level. This shows that consumer prices are driven more by services. 

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