The Reserve Bank of India on Friday projected the retail inflation at 5.1 percent in the current financial year ending March 31, 2022.
The projection is well within the Monetary Policy Committee's target to keep the rate of inflation at 4 per cent with an upper or lower tolerance level of 2 per cent.
Presenting the second bi-monthly monetary policy review, RBI Governor Shaktikanta Das announced that key repo rate -- the short term lending rates to banks -- will be kept unchanged at 4 percent.
Taking into consideration the measures taken so far as well as the upside risks, Das said the CPI (Consumer Price Index) inflation is projected at 5.1 percent during 2021-22.
This consists of 5.2 percent in the first quarter, 5.4 percent in the second quarter, 4.7 percent in the third quarter and 5.3 percent in the fourth quarter of this fiscal, with risks broadly balanced, he said.
According to Das, upside risks to inflation emanates from persistence of second COVID wave and consequent restrictions on activity on a virtually pan-India basis.
"In such a scenario, insulating prices of essential food items from supply side disruptions will necessitate active monitoring and preparedness for coordinated, calibrated and timely measures by both Centre and state governments to prevent emergence of supply side bottlenecks and increase in retail margins," the governor said.