Retail inflation high due to high food prices, adverse base effect: Centre

Despite erratic monsoon and negative seasonality in vegetable prices, food inflation in August was lower than the April peak of the current year

PGurus Newsdesk

September 13, 2022

Despite erratic monsoon and negative seasonality in vegetable prices, food inflation in August was lower than the April peak of the current year

Retail inflation resurges to 7% in August as food prices increases

As retail inflation rose to 7 percent in August from 6.71 percent in July, the Finance Ministry said late on Monday that consumer price index (CPI) based inflation “recorded a moderate increase”, adding that it could be attributed to “both an adverse base effect and an increase in food and fuel prices – the transient components of CPI inflation“.

It added through a series of tweets that core inflation calculated by excluding the transient components of CPI like “food and beverages” and “fuel and light” was recorded at 5.9 percent in August, and thus remained below the tolerance limit of 6 percent set by RBI for the fourth consecutive month.

The headline inflation based on retail CPI recorded a moderate increase from 6.71 % in July 22 to 7.0 % in August 22. This increase is attributable both to an adverse base effect and an increase in food & fuel prices – the transient components of CPI inflation. (1/7)

— Ministry of Finance (@FinMinIndia) September 12, 2022

“Prices of major inputs like iron ore and steel have sobered in the global markets. This coupled with the measures taken by the government to rationalize tariff structures of inputs to augment domestic supply has helped to keep cost-push inflation in consumer items under control,” the Ministry said.

Despite erratic monsoons and negative seasonality in vegetable prices, food inflation in August was still lower than the April peak of the current year.

With global inflation pressures, inflationary expectations remain anchored in India with stable core inflation, the ministry said on an optimistic note.

“IIM-Ahmedabad’s One-year Ahead Business Inflation Expectations Survey in July has declined by 34 bps to 4.83 percent from 5.17 percent in June. Inflation expectations have fallen below 5 percent after 17 months,” it said in another tweet.

IIM-Ahmedabad’s One-year ahead Business Inflation Expectations Survey in July 2022 has declined by 34 bps to 4.83% from 5.17% in June. Inflation expectations have fallen below 5% after 17 months. (5/7)

— Ministry of Finance (@FinMinIndia) September 12, 2022

“To soften the prices of edible oils and pulses, tariffs on imported items have been rationalized periodically and stock limits on edible oils have been kept, to avoid hoarding,” the Ministry said while listing the measures taken to curb prices of essential commodities.

Inflation in “oils and fats” and”pulses and products” has moderated to 5.62 percent and 2.52 percent, respectively, the Finance Ministry pointed out.

“The government has prohibited exports of food products like wheat flour/ atta, rice, maida, etc. to keep domestic supplies steady and curb the rise in prices. The impact of these measures is expected to be felt more significantly in the coming weeks and months,” it said.

[With Inputs from IANS]

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