Mumbai (Maharashtra) [India], February 8 (ANI): Average retail inflation in India is projected to be at 5.3 during the next financial year 2023-24, the Reserve Bank of India governor Shaktikanta Das said on Wednesday while announcing monetary policy outcomes.

The projection, he said, is based on the assumption of a normal monsoon.

The average inflation in Q1 2023-24 is expected at 5.0 per cent, Q2 at 5.4 per cent, Q3 at 5.4 per cent, and Q4 at 5.6 per cent, respectively.

For the current financial year 2022-23, inflation is projected at 6.5 per cent, with an average of 5.7 per cent in the January-March 2023 quarter, he said.

"The MPC will continue to maintain strong vigil on the evolving inflation outlook so as to ensure that it remains within the tolerance band and progressively aligns with the target," Das added.

Looking ahead, while inflation is expected to moderate in 2023-24, it is likely to rule above the 4 per cent target.

"The outlook is clouded by continuing uncertainties from geopolitical tensions, global financial market volatility, rising non-oil commodity prices and volatile crude oil prices. At the same time, economic activity in India is expected to hold up well. The rate hikes since May 2022 are still working their way through the system."India's retail inflation, based on Consumer Price Index, during the month of December was at 5.72 per cent, versus 5.88 per cent in November and 6.77 per cent during October.

India's retail inflation was above RBI's six per cent target for three consecutive quarters and had managed to fall back to the RBI's comfort zone in November 2022.

Since May last year, the RBI has increased the short-term lending rate by 250 basis points, including today's, to contain inflation, mostly driven by external factors, especially global supply chain disruption following the Russia-Ukraine war outbreak.

"Consumer price inflation in India moved below the upper tolerance level during November-December 2022, driven by a strong decline in prices of vegetables," Das noted.

Going ahead, he said the food inflation outlook will benefit from a likely bumper rabi harvest led by wheat and oilseeds.

Meanwhile, the Monetary Policy Committee (MPC) of the RBI decided to raise the repo rate, the rate at which the RBI lends money to all commercial banks, by 25 basis points to 6.5 per cent.

Four out of six members of MPC have decided to go ahead with this hike in the repo rate, RBI Governor Shaktikanta Das has said.

The Shaktikanta Das-headed Monetary Policy Committee (MPC) started its three-day meeting on February 6 amid the rate hiking spree that started in May last year to check inflation.

Also, the Reserve Bank of India (RBI) has projected India's real GDP growth to be at 6.4 per cent for the next financial year 2023-24.

"Broad-based credit growth, improving capacity utilisation, government's thrust on capital spending and infrastructure should bolster investment activity," RBI governor Das said.

"According to our surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. On the other hand, protracted geopolitical tensions, tightening global financial conditions and slowing external demand may continue as downside risks to domestic output," he added.

The GDP projections for Q1, Q2, Q3, and Q4 2023-24 are estimated at 7.8 per cent, 6.2 per cent, 6.0 per cent, and 5.8 per cent, respectively, with risks evenly balanced. (ANI)