Hawkish review ahead: MPC likely to revise its inflation forecast upwards

The uptick in the CPI inflation was primarily led by food, housing and fuels

In December 2017, the Monetary Policy Committee (MPC) had left the repo rate unchanged at 6 per cent and retained the neutral stance of the monetary policy. At that time, it had marginally increased its Consumer Price Index (CPI) inflation forecast for the second half of 2018-19 to 4.3-4.7 per cent, from the earlier 4.2-4.6 per cent.

Subsequently, the CPI inflation spiked from the modest 3.6 per cent in October 2017 to 4.9 per cent in November and 5.2 per cent in December, overshooting the upper end of the MPC’s forecast range. 

This uptick in the CPI inflation was primarily led by