According to a survey by the Reserve Bank of India, domestic inflation expectations for both three months and one year have crossed the 10 per cent level, as projected by the central bank in its latest monetary policy review. inflation At 5.7 per cent for the current fiscal year 2022-23.
“The average inflation sentiment of households for the current period remained unchanged at 9.7 per cent in the latest survey round, while expectations for both three months and one year rose 10 basis points to 10.7 per cent and 10.8 per cent, respectively, as compared to the January 2022 rounds. RBI’s Household Inflation Expectancy Survey said.
The survey, which was conducted during March 2-11 across 6,033 urban households in 19 major cities, said the three-month ahead expectations for overall prices and inflation generally align for food and non-food products. While a year ahead expectations were more aligned for non-food products and services.
In its First Bi-monthly Monetary Policy Statement for FY23 On Friday, the RBI raised its retail inflation forecast for 2022-23 to 5.7 per cent from 4.5 per cent estimated earlier.
Presenting the policy review results of the Monetary Policy Committee, RBI Governor Shaktikanta Das said the central bank has raised its CPI inflation projections as “increased geopolitical tensions from the end of February”, changing an earlier story. and has largely clouded the inflation outlook for the year.
Das said feed cost pressures may continue due to global supply constraints, which may also have an impact on poultry, milk and dairy product prices.
On food prices, he said a possible record rabi crop would help keep domestic prices of cereals and pulses under check. “Global factors such as reduced supply of wheat from the Black Sea region and unprecedentedly high international prices of wheat, however, could put a floor below domestic wheat prices.”
On non-food items, the RBI governor said the rise in crude oil prices since end-February poses a substantial risk to inflation. “A sharp increase in domestic pump prices could trigger a broad-based second round of price pressures.”
Das said higher international commodity prices and higher logistical disruptions could push up input costs across sectors. “Therefore, their pass-through to retail prices guarantees continuous monitoring and proactive supply management.”
“Keeping these factors in mind and on assumption of a normal monsoon and average crude oil price (Indian basket) at USD 100 per barrel in 2022, inflation is now projected at 5.7 per cent in 2022-23, at Q1,” he said. 6.3 per cent; Q2 at 5.8 per cent; Q3 at 5.4 per cent; and Q4 at 5.1 per cent.”
Prices of vegetables, metals and milk International crude oil prices are already at higher levels in the country amid current geopolitical tensions. The Reserve Bank of India said on Friday that domestic inflation could rise further if crude oil prices rise by 10 per cent from the baseline of $100 a barrel.
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