The MPC is mandated to target headline inflation based on consumer price index (retail inflation). But there’s another figure that could spoil it for North Block and that’s the core inflation number — a result of headline inflation minus the food and fuel prices. Ever since the panel was formed in June 2016, core inflation has been below the headline number only once. Since October 2016, core inflation has averaged 5.2%, while the average is 3.7% for headline. One change that’s certain to happen is the change in RBI’s stance to ‘neutral’ from ‘calibrated tightening’.

Source: Mint February 06, 2019 16:07 UTC