Retail inflation inched up to an eight-month high of 6.07% in February, remaining above the RBI's comfort level for the second month in a row, mainly on account of a rise in food prices, official data showed on Monday, March 14. The Consumer Price Index (CPI) based retail inflation was 5.03% in February 2021 and 6.01% in January this year. The previous high was 6.26% in June 2021. The Reserve Bank of India (RBI) has been asked by the government to ensure that the CPI inflation remains at 4% with a margin of 2% on either side.
Another set of data released by the government earlier in the day showed that the Wholesale Price Index (WPI) based inflation in February rose to 13.11% on hardening of prices of crude oil and non-food items, even though food articles softened. According to the CPI data released by the National Statistical Office (NSO), the rate of price rise in the food basket was 5.89% in February, up from 5.43% in the preceding month.
In the food basket, inflation in cereals moved up to 3.95%; meat and fish to 7.45%, while for eggs, the rate of price rise was 4.15% during the month. Among others, vegetables turned dearer with an inflation print of 6.13%, and for spices it rose to 6.09%. In fruits, the inflation remained static at 2.26% when compared to the preceding month.
In 'fuel and light', inflation softened to 8.73% from 9.32% in January. The RBI mainly factors-in the CPI-based inflation while arriving at its bi-monthly monetary policy. The RBI has not changed the key policy rate after May 2020, citing inflationary concerns and to support growth.
The RBI has retained the retail inflation projection for 2021-22 at 5.3%, with January-March quarter of the fiscal at 5.7% on account of unfavourable base effects that ease subsequently. The central bank has projected the retail inflation for 2022-23 at 4.5%.