On Wednesday, RBI Governor Shaktikanta Das said that Inflation in India is likely to hover around 6.7% this fiscal year, up from 5.7% previously.

The Monetary Policy Committee has raised the repo rate by 50 basis points to 4.90%, Shaktikanta Das announced, adding that the MPC is focused on unwinding easing.

The war in Ukraine continues, Das said, and India faces new challenges every day, exacerbating supply chain problems. The war has led to a globalisation of inflation, he said.

In April, consumer prices continued to rise as inflation surged to an eight-year high of 7.8%. Wholesale prices are also rising the fastest in more than three decades, increasing pressure on companies to pass on high costs to consumers.

Last month, the Reserve Bank of India raised its key lending rate by 40 basis points in its off-cycle monetary policy review to curb rising inflation.

Moreover, the RBI kept India’s growth rate at 7.2% in FY23. India’s economic growth slowed further last quarter due to global supply shortages and rising input costs.