Pointed attack on inflation to continue, says FM Nirmala Sitharaman

The finance minister also foresees monsoon being favourable for agriculture. Production is expected to be good and rural demand is seen remaining intact

The government will have to be mindful of the movement in prices, and monitor it item by item to rein in prices, Finance Minister Nirmala Sitharaman said.

“We will have to be mindful and watchful about how the price movement is. I will keep monitoring item by item to rein in prices for anything that goes haywire. This pointed attack on inflation will need to continue,” Sitharaman said.

Data released Tuesday showed India’s retail inflation marginally easing in June to 7.01 per cent from 7.04 per cent in May, however the consumer price index-based inflation remained well above the Monetary Policy Committee’s (MPC) medium-term target of 4 (+/-2) per cent for the sixth consecutive month.

Based on the Reserve Bank of India’s (RBI) assessment, inflation is seen gradually easing in the second half of 2022-23. This precludes the chances of inflation having a hard landing in India, RBI Governor Shaktikanta Das had said last week.

“As the RBI has estimated, till the start of the second half of the year, both RBI and government will have to be mindful,” Sitharaman said Tuesday.

The rising inflation has prompted the Monetary Policy Committee to revise its inflation projection for 2022-23 in June to 6.7 per cent on the back of evolving geopolitical developments.

About three-fourths of the revision in June was due to geopolitical spillovers to food prices which led to the RBI increasing the policy repo rate by 40 bps and 50 bps in May and June, respectively.

In June inflation was partly contained as the centre announced cut in taxes on petrol and diesel, and imposed restrictions on food exports.

The finance minister also said that she sees monsoon being favourable for agriculture. The production is expected to be good and rural demand is seen remaining intact, Sitharaman said.