The Reserve Bank of India (RBI) Governor Shaktikanta Das said core inflation definitely remains a concern for the central bank at Business Today’s Banking & Economy Summit and the BT-KPMG Best Bank Awards in Mumbai on Friday. He even drew a parallel with Mahabharat to illustrate his point.
"Core inflation still remains sticky at 6 per cent, this has to be dealt with. We have to be very resilient and focus like Arjuna's eye has to be maintained on core inflation," said Das during an interview with Udayan Mukherjee, Global Business Editor, BT TV.
Das also said it is too early to revisit the inflation target of 4 per cent with 2 per cent deviation on either side, in the current situation.
“I don’t think there is any need for any change. I would not think the target needs to be revisited,” RBI's Das said. “It is too early to shift the goal post. The 4 per cent target has a certain meaning.”
The RBI has been asked by the central government to ensure inflation remains within 6 per cent.
“There could be a moderation in inflation target numbers globally but it would be too soon to shift the target,” Das said.
"Inflation did peak at 7.8 per cent in April 2022. Now, it has come down to 5.7 per cent in December, mainly due to softening of food inflation. RBI has not lost sight of the need to focus on inflation," said Das.
Retail inflation declined to a one-year low of 5.72 per cent in December 2022 mainly due to cooling vegetable prices, according to official data released on Thursday.
The Consumer Price Index (CPI) remaining below 6 per cent for the second month in a row has provided some room to the Reserve Bank to pause interest rate hike which has been going on since May last year.
The CPI-based retail inflation was at 5.88 per cent in November 2022 and the previous low was 5.66 per cent in December 2021. Retail inflation is on a downward trajectory since October.
As per the data released by the National Statistical Office (NSO) on Thursday, inflation in the food basket was at 4.19 per cent in December as against 4.67 per cent in November and 4.05 per cent in December 2021.