More economists are joining the ranks of Reserve Bank of India (RBI) deputy-governor Michael Patra and others in saying the inflation projections made by the central bank in February need to be revised because of the surge in commodity prices following the Russia-Ukraine conflict.

However, with growth worries remaining, experts are of the view that next month’s policy meet is unlikely to see the monetary policy committee raising the policy rate which is now at 4 per cent.

India’s retail inflation rose to an 8-month high of 6.07 per cent in February, remaining above the central bank’s comfort level of 6 per cent for the second consecutive month.

The RBI had expected inflation to peak in the fourth quarter of this fiscal and moderate thereafter.

However, the higher than expected rise in the price of various commodities that include crude oil has led economists to question this forecast.

Last week, deputy-governor Patra had said that the hostilities pose an upward risk to its inflation forecasts.

After Patra, other MPC members such as J.R. Varma and Ashima Goyal have acknowledged the RBI’s growth and inflation forecasts could be overwhelmed by the surge in energy and food prices.

In an interview to Bloomberg, Shashanka Bhide the external member of the interest rate setting panel said that the conditions that are now being witnessed is quite different from what was seen in the beginning of February and that its projections will have to be revised.

RBI bulletin

An report on the economy released on Thursday warned the current geo-political conflict could pose downside risks to the economy while at the global level, it can have an adverse impact necessitating downward revision of growth for 2022 and beyond.

The central bank also cautioned that the global financial conditions could tighten further, bringing fresh challenge to emerging economies who are already confronting problems such as currency depreciation and massive sell-off by foreign portfolio investors amid slowing growth.

The report said India is making steady progress on the domestic front as it recovers from the third wave.