MPC's dilemma: RBI projects 5.1-5.6% CPI inflation in first half of 2018-19

Economists expect the CPI to inch upward as the adverse base effect and seasonally high food prices push up the inflation rate

In its last meeting, the monetary policy committee (MPC) chose to maintain the status quo on rates. As seen in Chart 1, the repo rate has remained at 6 per cent since August last year.

Since that meeting in February, the consumer price index (CPI) has fallen to 4.4 per cent in February, down from 5.01 per cent in January, aided by the falling food inflation rate. But as seen in Chart 2, core inflation continues to remain sticky. 

Economists expect the CPI to inch upward as the adverse base effect and seasonally high food prices push up the inflation