Retail inflation based on the Consumer Price Index (CPI) may have breached the upper tolerance level of the Reserve Bank of India’s (RBI) 2 per cent-6 per cent target range in November. The government’s Statistics Office will come out with monthly inflation data on Tuesday at 5.30 pm.

The retail inflation rate was 4.8 per cent in October. The expectation is that the November headline could be near 6 per cent or even more than that because of higher food prices. Prices of cereals and pulses are already high, while some of the vegetables, including two components of TOP (Tomato, Onion and Potato), onion and tomato, are showing some upward movement. At the same time, spice prices are skyrocketing, though they have a lower weight in overall inflation.

Food prices account for almost half of the retail inflation basket.

Meanwhile, the government says inflation is stable now. On Monday, in a written response in Lok Sabha, Finance Minister Nirmala Sitharaman said that India’s retail inflation has declined from an average of 7.1 per cent in April-October 2022 to 5.4 per cent in the corresponding period of 2023. The retail inflation is now stable and within the notified tolerance band of 2 per cent to 6 per cent. “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 core inflation has declined from 5.1 per cent in April 2023 to 4.3 per cent in October 2023,” she said.

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 from global shocks and adverse weather conditions. Proactive supply-side initiatives by the government and effective demand stabilization measures by the Reserve Bank of India have helped resolve the demand-supply mismatches and rein in inflation, she added.

The Minister also listed measures to tame inflation, and these include strengthening buffers of key food items and making periodic open market releases, easing imports of essential food items through trade policy measures, preventing hoarding through imposition/revision of stock limits, and channelling supplies through designated retail outlets.

“To ensure food security to the poor, the Pradhan Mantri Garib Kalyan Anna Yojana, providing free food grains to about 81.35 crore beneficiaries, has been extended for a period of five years with effect from 1st January 2024. In October 2023, government also increased the subsidy under Pradhan Mantri Ujjwala Yojana from Rs. 200 to Rs.300 per 14.2 kg cylinder,” the Minister said.

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