Union Finance Minister Nirmala Sitharaman on Monday said that retail inflation is now “stable” and within the notified tolerance band of 2% and 6%. “A steady decline in core inflation, estimated after removing volatile food and fuel items from retail inflation, has been critical in weakening the inflationary pressure in the Indian economy,” the minister informed the Lok Sabha in response to a question on retail inflation.
Retail inflation has declined from an average of 7.1% in April-October 2022 to 5.4% in the corresponding period of 2023, the minister said, adding that core inflation has declined from 5.1% in April 2023 to 4.3% in October 2023.
Consumer price index based inflation or retail inflation eased to 4.87% in October, which was a five month low, amidst easing of prices of some food items.
The minister further said that after the notification of the inflation tolerance band in 2016, retail inflation in India has been mostly within acceptable limits.
“Temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions,” she said, adding that proactive supply side initiatives by the government and effective demand stabilisation measures by the Reserve Bank of India have helped resolve the demand-supply mismatches and to rein in inflation
Official data on retail inflation in November will be released on Tuesday although analysts believe that retail inflation could have risen once again to over 6% due to higher prices of vegetables and pulses.
“We estimate that CPI inflation rose in November to 6.15% year on year, a sharp reversal from the moderating trajectory over the past couple of months,” said Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics, Barclays in a recent note, adding that food inflation is likely to accelerate to 9.2% in November.
According to CRISIL’s monthly indicator of food plate cost, the cost of representative home-cooked vegetarian and non-veg thalis increased 10% and 5% month-on-month in November.