Moderation in retail inflation, need to keep a watch on imported inflation: Finance Minister

‘Slow down in price hike’

‘Slow down in price hike’

India’s retail inflation crossed 6% this January for the first time in six months, but the Consumer Price Index (CPI) has slipped sequentially in the past two months, reflecting price increases, the finance ministry said in a report. Indicates a slowing of the trend. on Wednesday.

The ministry said reduction in vegetable prices and better prospects for food grains production on account of fresh winter crop is the reason for an “optimistic outlook on inflation”, though it also stressed the need to keep a close watch on imported inflation through edible oils. Gave. They can have multifaceted effects on crude oil and the value chain.

The report of the Department of Economic Affairs, Department of Economic Affairs in the ministry said that January’s retail inflation rate of 6.01% is mainly due to ‘food and beverages’, ‘clothing and footwear’ as well as an adverse base effect. Average CPI inflation, between April 2021 and January 2022, is 5.30% – well within the 6% upper limit for inflation tolerance set by RBI’s Monetary Policy Committee (MPC).

“Should retail inflation remain capped at 4.5% projected by the MPC in 2022-23, liquidity levels in the economy will remain high and will interface with low interest rates to provide easy financing options to industry and individuals. Global inflation and energy prices are likely to be influential in determining India’s rate of inflation and the government expects this to decline to achieve a GDP deflator of 3.0-3.5% projected in the budget,” it estimated.

“Due to low global inflation and a large base effect, with WPI inflation expected to decline significantly in 2022-23, the GDP deflator is attained at 3.0-3.5%, as against the nominal GDP projection of 11.1% in Budget 2022 contained in. -23,” the report said.

“CPI core inflation, after decelerating from 6.2% in November, 2021 to 6.12% in December, rose to 5.98% in January, mainly due to inflation across all major groups except ‘clothing and footwear’,” the report said. due to lack.”

Inflation at the wholesale level has also been moderating for less than two months, but remains high at around 13% in January, ‘primarily due to higher prices for imported goods and especially crude,’ the report said. .

The report indicated that the wide gap between inflation in wholesale and consumer prices, indicating a weak transmission of input cost pressures to retail prices, would need to be monitored in the coming months.

Noting that the third COVID-19 wave in the country is now receding, the ministry said that India is well prepared for growth that will be ‘inclusive and sufficiently large, with rising levels of direct income and Will provide support to help. vulnerable groups of the society.

“Exports will continue to grow provided there is no slowdown in the global economy. Imports will also increase but will be reckoned with the requirements of the country which is not available within,” it said.