New Delhi: Finance Minister Nirmala Sitharaman Monday said retail inflation is now “stable” and temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions.
In a written reply to the Lok Sabha, Sitharaman said 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,” she said.
The core inflation rate has declined from 5.1 per cent in April 2023 to 4.3 per cent in October 2023.
The minister said retail inflation in India has been mostly within acceptable limits after the notification of the inflation tolerance band in 2016.
“Temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions,” Sitharaman added.
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 rein in inflation, she added.
The measures taken by the government to restrain inflation include strengthening buffers for key food items, making periodic open market releases, easing imports of essential food items through trade policy measures, and preventing hoarding through imposition/revision of stock limits, and channelling supplies through designated retail outlets.
To ensure food security for the poor, the Pradhan Mantri Garib Kalyan Anna Yojana, which provides free foodgrains to about 81.35 crore beneficiaries, has been extended for five years with effect from January 1, 2024.
In October 2023, the government also increased the subsidy under the Pradhan Mantri Ujjwala Yojana from Rs 200 to Rs 300 per 14.2 kg cylinder.