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Steps To Curb Prices Will Be Significant In Few Months: FinMin
The Finance Ministry ascribed the rise in inflation to base effect and hike in food and fuel prices, and emphasised that initiatives that government has undertaken to curb price hike will be felt more significant in the next few months.
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The Finance Ministry on Monday said that the initiatives that the central government has undertaken to curb price hikes will be felt more significant in the next few months.
As per the data, retail inflation grew from 6.71 in July to 7 per cent in August month.
The ministry also said that the core inflation remained below the sufferance limit of 6 per cent for the fourth successive month. The calculation for core inflation at 5.9 per cent arrived by excluding the transient components of the consumer price index (CPI) food and beverages and fuel and light.
The ministry in a series of tweets said, "The headline inflation based on retail CPI recorded a moderate increase from 6.71 per cent on July 22 to 7.0 per cent on 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."
For an instance from April 2020 to November 2020, for the second time Reserve Bank of India adopted the inflation targeting approach where the retail inflation has breached the upper sufferance limit of 6 per cent for eight successive months.
However, in its optimistic approach finance ministry expressed that the export curb imposed on atta, rice, maida, etc by the government will temperate the prices of such items.
"Government has prohibited exports of food products like wheat flour/atta, rice, maida, etc to keep domestic supplies steady and curb rise in prices. The impact of these measures is expected to be felt more significantly in the coming weeks and months," the ministry tweeted.
Similar measures in the past have resulted in moderation of prices of commodities like edible oil and pulses, the ministry said.
"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. Inflation in oils and fats and pulses and products have moderated to 5.62 per cent and 2.52 per cent respectively," said it tweeted.
The ministry said that coupled with the steps which the government undertook to rationalise tariff structures of inputs to increase domestic supply helped to keep cost-push inflation under control under the consumer items segment by referring to softening prices of iron ore and steel.
"Despite erratic monsoons and negative seasonality in vegetable prices, food inflation in July is still lower than the April peak of the current year. With global inflation pressures, inflationary expectations remain anchored in India with stable core inflation," as per the ministry.
According to the survey, July month has witnessed 34 basis points from 5.17 per cent in June to 4.83 per cent. Citing the survey the ministry said, after 17 months, the expectation of inflation has dipped below 5 per cent.