New Delhi, Jun 4 (KNN) The Reserve Bank of India (RBI) on Friday projected that the Consumer Price Index (CPI) will remain at 5.1 per cent in FY22.

"CPI inflation is projected at 5.1 per cent during 2021-22: 5.2 per cent in Q1; 5.4 per cent in Q2; 4.7 per cent in Q3; and 5.3 per cent in Q4 of 2021-22, with risks broadly balanced," said RBI Governor Shaktikanta Das during the Monetary Policy Committee announcements on Friday.

He said that the favourable base effects that brought about the moderation in headline inflation by 1.2 percentage points in April, may persist through the first half of the year, conditioned by the progress of the monsoon and effective supply side interventions by the government.

''Upside risks to inflation emanate from persistence of the second wave and consequent restrictions on activity on a virtually pan-India basis. In such a scenario, insulating prices of essential food items from supply side disruptions will necessitate active monitoring and preparedness for coordinated, calibrated and timely measures by both Centre and states to prevent emergence of supply chain bottlenecks and increase in retail margins,'' the governor added.

Das further said that the second wave of COVID-19 is associated with unexpectedly higher rates of morbidity and mortality relative to the first wave. The outbreak of mutant strains that render the virus highly transmissible across both urban and rural areas has led to fresh restrictions on activity being imposed across a large swath of the country.

''Yet unlike in the first wave, when the economy came to an abrupt standstill under a nation-wide lockdown, the impact on economic activity is expected to be relatively contained in the second wave, with restrictions on mobility being regionalised and nuanced. Moreover, people and businesses are adapting to pandemic working conditions,'' he stated.