Retail inflation may rise to 4% in FY20: Report

Headline inflation, the key gauge tracked by the Reserve Bank for setting its policy rates, will increase by 0.60 percentage point to 4 per cent in 2019-20, a report said Monday.

The rise in the consumer price inflation (CPI) will be largely on a surge in food inflation to 3 per cent from the abnormally low of 0.1 per cent, the report by the research arm of domestic ratings agency Crisil said.

It added that the surge in the overall inflation is largely due to statistical reasons, because of a low-base effect.

It can be noted that under the medium term inflation targeting framework, the Reserve Bank is committed to ensuring inflation is at 4 per cent with a two percentage point leeway on either side.

Crisil said FY2018-19 is the second consecutive year that the inflation has undershot the RBI's target of 4 per cent.

Its chief economist Dharmakirti Joshi said the low food inflation should sustain if the RBI were to achieve its aim of containing inflation.

In a special report, the agency