The Finance Ministry late on Monday termed the increase in retail inflation from 6.71% in July to 7% in August as ‘moderate’, and attributed it to an adverse base effect and an increase in food and fuel prices, which it called “the transient components” of Consumer Price inflation.
Core inflation, which excludes these ‘transient components’ of food and beverages as well as fuel and light inflation, was recorded at 5.9% in August, remaining below the tolerance limit of 6% for the fourth consecutive month, the Ministry emphasised. “Despite erratic monsoons and negative seasonality in vegetable prices, food inflation in July still lower than the April peak of the current year. To soften the prices of edible oils & pulses, tariffs on imported items have been rationalised periodically & stock limits on edible oils have been kept, to avoid hoarding,” the Ministry said in a series of tweets. It later clarified that it was referring to food inflation in August. Stressing that inflation in “oils and fats” and “pulses and products” have moderated to 5.62% and 2.52% respectively, it said the Centre “has prohibited exports of food products like wheat flour/atta, rice, maida, etc. to keep domestic supplies steady and curb rise in prices”.
“Prices of major inputs like iron ore & steel have sobered in the global markets. This, coupled with the measures taken by the Govt. to rationalise tariff structures of inputs to augment domestic supply, has helped to keep cost push inflation in consumer items under control,” it concluded.