The pandemic and the Ukraine war led to disruptions that last year caused gaps in data availability and errors, said Michael D Patra, deputy governor of the Reserve Bank of India (RBI), on Friday.

Headline inflation persistently crossed the upper limit of the tolerance band set by the central bank for nine consecutive months in 2022. The development prompted the RBI to write a detailed letter to the government, outlining the factors contributing to the deviation and projecting a future trajectory that would bring the price rise back down to the desired 4 per cent mark.

As per the Central Bank Act, if the RBI fails to meet the inflation range of 2 per cent to 6 per cent for three consecutive quarters, it is mandated to submit a report to the central government. This report is required to provide an explanation for the deviation, suggest corrective measures, and provide an estimated timeframe for attaining the target inflation level.

Many of these deviations stem from assumptions made about external factors beyond the control of domestic monetary policy, such as crude oil prices, currency exchange rates, the monsoon’s pattern, global economic growth, fiscal strategies, and structural policy changes, said Patra at a Statistics Day Conference.

“Forecast errors are used as a learning experience by us, resulting in correctional steps and additional information gathering. Incidentally, the RBI publishes these deviations regularly and explains reasons underlying them, as mandated in legislation or supporting regulations,” said Patra.

“In fact, this has resulted in our near-term forecasts becoming increasingly accurate over time. Our analysis of forecast errors indicates there is no systematic bias and that they are offsetting when assessed over a sufficiently long-time span.”

The RBI has cut inflation aim for the current fiscal year to 5.1 per cent from 5.2 per cent in April policy. After briefly reaching the target range in March, India’s consumer inflation has been declining and reached a 25-month low of 4.25 percent in May.