RBI also raised the average inflation projection for the second half of the year to 4.8% from 4.7% in June. The central bank expects inflation to edge higher to 5% in the first quarter of next fiscal year. The policy statement also cited the implementation of minimum support price hike as the primary factor stoking inflation this year. The government has fixed the MSP at 150% of the cost of production of all kharif crops. RBI also highlighted its concerns over crude oil prices as it remains elevated despite seeing a slight moderation. The central bank however remains sanguine about the overall performance of monsoon as it augurs well for food inflation in the medium-term.
