The Reserve Bank of India (RBI) also projected consumer price index (CPI) inflation at 5.1 per cent for FY21-22. “Adequate system level liquidity has been ensured and targeted liquidity to stressed entities have been provided,” said Das. It is the highest retail inflation recorded in three months. Experts are worried that inflation will further increase due to high energy prices.
The impact on economic activity is expected to remain contained due to lower restrictions amid the second wave of Covid-19 pandemic, the RBI Governor said.
What is retail inflation? Retail inflation is the increase in price of all the consumer goods, which makes it high due to the high demand and low supply of the basic necessities and it also includes various other commodities in it.
Although the recovery momentum has improved with the country vaccination drive and reopening of business activities, economists suggest that key economic drivers like investment and exports remain weak.
The rising cost of fuel and energy has made matters worse as it has increased the price of most commodities and services. Though there has been no increase in petrol and diesel prices this month, fuel rates are already very high, contributing to inflationary pressure.