The Reserve Bank on Thursday cut the retail inflation forecast to 2.9-3 per cent for the first half of current fiscal, mainly due to lower food and fuel prices as well as expectation of a normal rainy season.

The inflation path during 2019-20 is likely to be shaped by several factors. First, low food inflation during January and February will have a bearing on the near-term inflation outlook. Second, the fall in the fuel group inflation witnessed at the time of the February policy has become accentuated, the RBI said in its first bi-monthly monetary policy for 2019-20.

“Taking into consideration these factors and assuming a normal monsoon in 2019, the path of CPI inflation is revised downwards to 2.4 per cent in Q4:2018-19, 2.9-3.0 per cent in H1: 2019-20 and 3.5-3.8 per cent in H2: 2019-20, with risks broadly balanced,” the RBI said.In its previous policy outcome in February, the RBI had projected retail inflation between 3.2-3.4 per cent for the first half of 2019-20.

Among others, the apex bank said Consumer Price Index-based inflation, excluding food and fuel, in February was lower than expected, which has imparted some downward bias to headline inflation.