An illustration showing a graph and the word 'inflation'.
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Finance Minister Nirmala Sitharaman on Monday presented the Economic Survey, a comprehensive document on the state of the Indian economy. The Economic Survey is tabled ahead of the Union Budget, which will be presented on July 23.
Here's what the Economic Survey says on prices and inflation:
Inflation moderated in FY24 due to timely policy interventions by the Central Government and price stability measures implemented by the Reserve Bank of India (RBI).
The retail inflation rate declined to 5.4 per cent in FY24, the lowest it has been since the Covid-19 pandemic.
The Survey attributes the decline in inflation to a fall in core inflation, both in goods and services.
Core services inflation eased to a nine-year low, while core goods inflation also declined to a four-year low.
The transmission of monetary policy to core inflation was evident, as the RBI's gradual increase in the repo rate by 250 basis points since May 2022 led to a decline in core inflation by around four percentage points between April 2022 and June 2024.
However, food inflation remains a concern, driven by adverse weather conditions and supply chain disruptions. Food inflation stood at 6.6 per cent in FY23 and increased to 7.5 per cent in FY24.
The government implemented administrative actions, including dynamic stock management, open market operations, and trade policy measures, to mitigate food inflation.
Inflation rates varied across states and Union Territories, with 29 out of 36 recording rates below 6 per cent in FY24. States with elevated food prices tend to experience higher rural inflation due to the greater weightage of food items in the rural consumption basket.
Looking ahead, the RBI projects inflation to fall to 4.5 per cent in FY25 and 4.1 per cent in FY26, assuming normal monsoon and no external or policy shocks.
The Survey also emphasizes the need for a clear forward-looking vision to achieve long-term price stability, including assessing progress in developing modern storage and processing facilities for fruits and vegetables to manage seasonal price spikes.
Union Budget 2024 | Making a record for any Finance Minister, Nirmala Sitharaman will be presenting her 7th Union Budget on July 23, 2024 under the Modi 3.0 government. While inflation has burnt a hole in the pockets of 'aam janata', will this Budget spell relief for Indians? Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.