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RBI expected to prioritise growth during April meet

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

Notably, the consumer price index (CPI) inflation print has remained at an 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 prices in subsequent months owing to the Russia-Ukraine crisis.

“Nevertheless, we still expect the RBI to prioritize 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 percent YoY in FY22.”

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

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

“Within food, vegetables primarily caused the spike in inflation as excluding vegetables, CPI came in at 6.1 percent 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 percent 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 percent YoY in February 2022.

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

“All three components of core inflation remained broadly flat with no major movement.”

“Slightly higher inflation in housing and clothing and footwear was offset by marginally low inflation in miscellaneous items.”

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