InvestorQ : Why do you think that inflation has gone up so sharply in the last few months; is it only because of onion prices?
Juvina Maggie made post

Why do you think that inflation has gone up so sharply in the last few months; is it only because of onion prices?

Answer
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Angel dcosta answered.
8 months ago


In its policy announcement, the RBI underlined that the inflation outlook remained highly uncertain. The RBI did blame the unusual spike in onion prices for the surge of inflation above the upper tolerance band. In fact, if you look at the projections, RBI has revised CPI inflation projection upwards to 6.5% for Q4 of 2019-20, 5. 4.5% for H1 of 2020-21 and 3.2% for Q3 of 2020-21. However, it has not ruled out further upside risks to inflation. GDP growth for FY 2020-21 has been projected at 6%, which is broadly in consonance with the objective of achieving medium-term inflation target of 4%. However, the markets are apprehensive that the RBI could raise its near-term forecasts after inflation surged to 7.35% in December; which is the fastest pace in five years.