According to the data released by the Ministry of Statistics & Programme Implementation (MoSPI), India’s retail inflation surged to6.07 in February.
About the surge in inflation
Retail inflation is measured by the Consumer Price Index (CPI). February’s retail inflation of6.07 is over and above the Reserve Bank of India’s (RBI) threshold of 6. In January retail inflation was6.01. Therefore, this is the alternate successive month that the Consumer Price Index (CPI) data has crossed the Reserve Bank of India’s (RBI) upper threshold of 6.
Inflation targeting framework of RBI
- In 2016, a statutory basis was provided for the implementation of the flexible inflation targeting frame by amending the Reserve Bank of India (RBI) Act, 1934.
- According to the amended Reserve Bank of India (RBI) Act, 1934, the Central Government in consultation with RBI should determine the affectation target in terms of a consumer price index (CPI), formerly every five years.
- In this regard, on March 31, 2021, the Centre notified that the inflation target for the next five- year period (April 1, 2021, to March 31, 2026) will be 4 with a margin of 2 on either side.
- That means the upper tolerance limit is 6 & lower tolerance limit is 2.
- The RBI has the mandate to ensure that the retail inflation is within the prescribed range.
About Consumer Food Price Index (CFPI)
According to the MoSPI data, the Consumer Food Price Index (CFPI), or the inflation in the food basket surged from5.43 in January to5.85 in February. The rise in Consumer Food Price Index (CFPI) was due to a swell in prices of oils and fats. Prices of vegetables also saw a rise of6.13 while the meat and fish member rose7.45.
According to the data released by the Ministry of Commerce & Industry, the wholesale price- based inflation (WPI) in February stood at13.11.
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