CPI Inflation

As per data released by Ministry of Statistics and Programme Implementation (MoSPI) on 14.6.21 Indian inflation is currently at a 6 month's high of 6.3% mainly triggered by higher food inflation which is at a 6 month high of 5.01%.

Food inflation which is at a 6 month month high of 5.01% is triggered by higher food and energy prices with energy prices soaring to 11.58% during the month as against 7.91% in the previous month.  

There is also a big jump in Wholesale Price Index (WPI) mainly triggered by increase in crude oil prices.  WPI is increasing consistently for the pat 5 months 

As per Government the high rate of inflation in May 2021 is primarily due to low base effect and rise in prices of crude petroleum, mineral oils viz. petrol, diesel, naphtha, furnace oil etc. and manufactured products as compared to the corresponding month of the previous year

What is the stand of Reserve Bank of India

In its monetary policy report released on 7.4.21 RBI the following is the projection by RBI "CPI inflation is projected to average 5.0 per cent in Q4:2020-21, 5.2 per cent in Q1:2021-22 and Q2, 4.4 per cent in Q3, and 5.1 per cent in Q4,"

Now with 6.3% CPI inflation is above the target set by RBI.

RBI earlier this month in its announcement kept the policy rates unchanged to bring about a boost to growth and keep a lid on inflation.  

RBI is committed to keep inflation lower to the extent possible to trigger economy into the growth path.

This is a wise approach.