The Monetary Policy Committee expects vegetable, egg and poultry prices to remain soft near term, but warned that prices of pulses, edible oil and spices could rise.

“The bumper kharif crop, rising prospects of a good rabi harvest, larger winter arrivals of key vegetables and softer egg and poultry demand on avian flu fears are factors auguring a benign inflation outcome in the months ahead,” the Monetary Policy statement said.

“On the other hand, price pressures may persist in respect of pulses, edible oils, spices and non-alcoholic beverages,” it said.

The supply chain bottlenecks easing because of the opening up of the economy should provide some respite to core inflation, the statement said. At the same time, other factors push core inflation higher.

“…. broad-based escalation in cost-push pressures in services and manufacturing prices due to increase in industrial raw material prices could impart upward pressure. Furthermore, there could be increased pass-through to output prices as demand normalises as indicated in the

Reserve Bank’s industrial outlook, services and infrastructure outlook surveys and purchasing managers’ indices (PMIs) and firms regain pricing power,” the statement said.

The MPC also expects global crude oil prices to be firm.

“International crude oil prices may remain supported by demand build up on optimism from vaccination and continuing production cuts by OPEC plus,” the statement said.

The MPC has revised its projection for consumer price inflation to 5.2 percent in Q4:2020-21, 5.2-5.0 percent for the first half of 2021-22 and 4.3 percent in Q3: 2021-22, with risks broadly balanced.

First Published:Feb 5, 2021 12:13 PM IST