Post the Reserve Bank of India Monetary Policy, rating agency CRISIL has stated that worry remains on the rising risks to CPI inflation. "International prices have surged for critical inputs imported by India: crude oil prices have crossed $70 per barrel, the highest since 2019, while edible oils, metals and minerals are at decadal high. Surge in transportation costs have further added to cost pressures. While producers are bearing a greater brunt of rising input costs for now, these could get passed on to consumers once demand recovers. In our recent report , we find that rising crude and edible oil prices are already getting passed on to consumer prices, while core inflation has started feeling some impact of rising metal prices through consumer durables. Moreover, food inflation - the prime mover of CPI - faces upside pressure from disruptions in rural economy due to the second wave, and rising global prices," the rating agency said in a note following the Monetary Policy.
According to CRISIL, within the limited policy space, the MPC will keep policy rates unchanged and the stance accommodative in the foreseeable future, and use other innovative tools to support financial conditions.
"Fiscal policy now needs to take the wheel, as it better positioned to drive last mile interventions to help a number of flailing segments," it stated.