The Reserve Bank has raised its inflation forecast for the current financial year to 5.70 per cent

High commodity prices are the main reason for the rise in retail inflation

Mumbai: In a three-day monetary policy review meeting of the Reserve Bank of India's Monetary Policy Committee (MPC), the MPC has raised its inflation forecast for the current financial year to 5.70 per cent.

Retail inflation, which was earlier projected at 5.10 per cent in the current financial year, has been raised to 5.70 per cent. Inflationary pressures will be temporary. In the last two months, inflation has gone above the Reserve Bank's maximum of 6 per cent. Inflation estimates are being kept high in view of rising commodity prices, Reserve Bank Governor Shaktikant Das said in a policy statement.

With the arrival of kharif crop, prices will start declining from the third quarter of the current financial year. The pressure on prices is expected to ease as trade conditions normalize. Global commodity prices have soared recently.

Prices of pulses and edible oils started declining in July as the government increased supply, the governor said. The government has set a target for the RBI to keep retail inflation at 4 per cent with two per cent plus minus. Retail inflation is expected to be 5.10 per cent in the first quarter, 5.90 per cent in the second quarter, 5.30 per cent in the third quarter and 5.80 per cent in the fourth quarter of the current financial year.