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

In particular, inflationary pressures of the consumer price index (CPI) have remained high as a result of higher-than-expected vegetable prices in February.

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In addition, inflation is expected to remain at a high level as a result of higher crude oil prices in the following months as a result of the crisis between Russia and Ukraine.

“Nevertheless, we still expect the RBI to prioritize growth at its April 2022 monetary policy meeting, as we believe growth is still a bigger concern than inflation at the moment,” said Motilal Oswal Financial Services.

“We expect inflation of 5.2-5.4 percent year-on-year in FY22.”

Earlier this month, CPI inflation reached an eight-month high of 6.1 percent year-on-year in February 2022.

In addition, food inflation reached a 15-month high of 5.8 percent yoy in February 2022, from 5.4 percent yoy a month ago.

“Within food, vegetables were the main driver of the inflation spike, as the CPI, excluding vegetables, was 6.1 percent year-on-year, similar to the January 2022 level.”

“Other products, such as grains and produce, meat and fish, spices and sugar and confectionery, which make up 17 percent in the CPI index, also contributed to higher inflation.”

On the contrary, fuel and energy inflation hit a 10-month low of 8.7 percent year-on-year in February 2022.

In addition, core inflation stood at 6.2 percent yoy in February 2022 for the fifth straight month.

“All three components of core inflation have remained broadly flat with no significant moves.”

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

This post RBI expected to prioritize growth at April meeting, says Motilal Oswal Financial Services

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