Finance Secretary T V Somanathan said that the retail inflation in India is expected to ease by December, attributing it to more favorable seasonal factors, the news agency Reuters reported.
Despite staying above the upper limit of the central bank’s 2-6 per cent tolerance band for the second consecutive month in August, retail inflation has seen a decline from its 15-month high of 7.44 per cent in July.
The primary driver for inflation has been sharp spikes in food prices, influenced by erratic weather conditions affecting the production of staples like vegetables, milk, and cereals.
The central bank has predicted retail inflation to decrease to 5.7 per cent in the December quarter, further cooling to 5.4 per cent in fiscal 2024.
Somanathan emphasised that, even with the inclusion of Indian bonds in JPMorgan’s widely tracked emerging market debt index, India retains the “policy discretion completely open in terms of regulation and taxation to safeguard our macroeconomic interests.” JPMorgan announced the inclusion of India’s local bonds in its Government Bond Index-Emerging Markets (GBI-EM) from 28 June 2024.
He added that India remains committed to achieving a fiscal deficit below 4.5 per cent of gross domestic product by 2025/26, targeting a fiscal deficit of 5.9 per cent for the financial year ending 31 March 2024.
