May inflation shocker may advance RBI's policy normalisation act

MPC likely to revise inflation forecast upward in August policy review

With May inflation prints giving a rude shock, Reserve Bank of India governor Shaktikanta Das may now have to review his stance on normalisation of the ultra-loose monetary policy. Das had assured the market earlier this month that normalisation of the policy, which has been enforced since the pandemic broke out in March last year, is not on the cards anytime soon.

The consumer price index-based inflation – the main yardstick of RBI for policy making purpose - rose in May, to 6.3% against the market estimate of 5.4%, with an across-the-board rise in food, fuel and core inflation. While