Rising retail price inflation due to high food prices, negative base effect: government
While retail price inflation rose from 6.71% in July to 7% in August, the Ministry of Finance said Monday evening that inflation based on the consumer price index (CPI) ” recorded a moderate increase,” adding that it could be attributed to “both a negative base effect and an increase in food and fuel prices – the transitory components of CPI inflation.”
He added through a series of tweets that core inflation calculated excluding transitory CPI components like “food and beverages” and “fuel and lighting” was recorded at 5, 9% in August, and therefore remained below the 6% tolerance limit. set by RBI for the fourth consecutive month.
“Prices of key inputs like iron ore and steel have sobered up on world markets. This, together with the measures taken by the government to rationalize input tariff structures in order to increase domestic supply, has helped to control consumer goods cost inflation,” the ministry said.
Despite an erratic monsoon and negative seasonality in vegetable prices, food inflation in August was still lower than the April peak of the current year.
With global inflationary pressures, inflation expectations remain anchored in India with stable underlying inflation, the ministry said on an optimistic note.
“The IIM-Ahmedabad survey of one-year business inflation expectations in July fell 34 basis points to 4.83% from 5.17% in June. Inflation expectations fell below 5% after 17 months,” he said in another tweet.
“To soften the prices of edible oils and pulses, tariffs on imported products have been periodically rationalized and storage limits for edible oils have been maintained, to avoid hoarding,” the ministry said while listing the measures taken. to reduce the prices of essential products.
Inflation for “oils and fats” and “pulses and derived products” moderated to 5.62 percent and 2.52 percent, respectively, the finance ministry said.
“Government has banned exports of foodstuffs like wheat flour/atta, rice, maida, etc. to keep domestic supply stable and curb rising prices. The impact of these measures should be felt more significantly in the weeks and months to come,” he said.