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Concerning the recent increase in inflation

The Consumer Price Index(CPI)??????? is used to calculate retail inflation . The retail inflation rate in February was 6.07 percent, which is higher than the Reserve Bank of India's (RBI) target of 6 percent. Retail inflation in January was 6.01 percent. Thus, the Consumer Price Index (CPI) data has above the Reserve Bank of India's (RBI) upper limit of 6% for the second month in a row.

RBI's Inflation Targeting Framework

The Reserve Bank of India (RBI) Act, 1934, was amended in 2016 to provide a statutory foundation for the implementation of the flexible inflation targeting framework.

 According to the modified Reserve Bank of India (RBI) Act of 1934, the Central Government should define the inflation goal in terms of consumer prices index (CPI), once every five years.  In this regard, the Centre announced on March 31, 2021, that the inflation goal for the following five years (April 1, 2021 to March 31, 2026) will be 4%, with a 2% margin on each side.

That implies the highest tolerance limit is 6% and the lower tolerance limit is 2%. The RBI is responsible for keeping retail inflation within the authorised range.

Failure to meet the inflation objective

Failure to meet the inflation target is caused by the following factors:

The average inflation rate for three consecutive quarters exceeds the upper tolerance level. The average inflation for three consecutive quarters is less than the lower tolerance level.

Concerning the Consumer Food Price Index (CFPI)

The Consumer Food Price Index (CFPI), or inflation in the food basket, increased from 5.43 percent in January to 5.85 percent in February, according to MoSPI statistics. The rise in the Consumer Food Price Index (CFPI) was caused by an increase in the price of oils and fats. Vegetable prices increased by 6.13 percent, while meat and fish prices increased by 7.45 percent. The wholesale price-based inflation (WPI) in February was 13.11 percent, according to figures issued by the Ministry of Commerce and Industry.

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