75% of the rise in inflation projection for FY23 due to food: RBI governor Shaktikanta Das

Speaking post the monetary policy review, RBI governor Shaktikanta Das said that almost 75 per cent of the increase in inflation projection for the current fiscal can be attributed to food prices.

The RBI revised the inflation projection upwards to 6.7 per cent from its earlier estimate of 5.7 per cent owing to intensifying cost pressures due to the supply side disruptions caused by the Russia-Ukraine war.

The revised inflation projections for FY23 are based on the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of US$ 105 per barrel


He said that barring prices of tomato and domestic electricity tariffs going up, largely the inflation has been driven by the war in Europe.

"Food inflation pressures accentuated, led by cereals, milk, fruits, vegetables, spices and prepared meals. Fuel inflation was driven up by a rise in LPG and kerosene prices. Core inflation (i.e., CPI excluding food and fuel) hardened across almost all components, dominated by the transport and communication sub-group," the RBI said in its statement.

Das said that the the outlook remains uncertain owing to the tense global geopolitical situation and its impact on commodity prices.

He outlined that the recent wheat export restrictions imposed by the government are beneficial but the low Rabi output due to heatwaves scorching some of the crops could be an offsetting risk.

Pressure on edible oil prices remains a concern despite the lifting of export ban by a major supplier, the RBI said.

The RBI raised the repo rate by 50 basis points to 4.9 per cent to fight inflation as it remains above the target band of 2-6% for four consecutive months.