RBI expected to prioritise growth

The Reserve Bank of India (RBI) is expected to prioritise growth over inflationary fears in its April, 2022 policy meet.

Notably, the consumer price index (CPI) inflation print has remained at elevated level due to higher-than-expected vegetable prices in February.

Moreover, inflation is expected to remain at elevated levels due to higher crude oil price in subsequent months owing to the Russia-Ukraine crisis.

“Nevertheless, we still expect the RBI to prioritise growth in its April 2022 monetary policy meet as we believe growth is still a bigger concern currently rather than inflation,” said Motilal Oswal Financial Services.

“We expect inflation in the range of 5.2-5.4 % YoY in FY22.”

Earlier this month, CPI inflation came in at an eight-month high of 6.1 % YoY in February 2022.

Besides, food inflation came in at a 15-month high of 5.8 % YoY in February 2022 versus 5.4 % YoY a month ago.

“Within food, vegetables primarily caused the spike in inflation as excluding vegetables, CPI came in at 6.1 % YoY similar to the level seen in January 2022.”

“Other items such as cereals and products, meat and fish, spices, and sugar and confectionary that constitute 17 % weight in CPI index also contributed to higher inflation.”

On the contrary, fuel and power inflation came in at a 10-month low of 8.7 % YoY in February 2022.

Furthermore, core inflation stood at 6.2% YoY for the fifth consecutive month in February 2022.