Finance Minister Nirmala Sitharaman said on August 16 that she expects retail inflation to be within the Monetary Policy Committee's (MPC) target range going ahead.
"There has been constant monitoring of essential goods and their supplies and all supply constraints are being dealt with. Going ahead, I expect inflation to remain well within the comfort range," she said at an interaction with media.
Consumer Price Index (CPI)-based inflation for July came in at 5.59 percent, back within the MPC's inflation targeting range of 4 (+/-2) percent, on the back of softening food prices. For the two months of May and June, CPI inflation was above the MPC's target band.
It was 6.30 percent in May, as food prices had hardened, and transportation costs rose due to higher petrol and diesel prices and localised lockdowns. Headline retail inflation had cooled slightly to 6.26 percent in June.
Data for July showed that the biggest drop in prices happened in vegetable, while there was a marginal drop in inflation in the oils and fats sub-group. Prices of pulses and products fell compared to June.
However, in the non-food category, high petrol and diesel prices continued affecting the budget of households. Fuel and light inflation was 12.38 percent in July, compared with 12.68 percent in June and 11.58 percent in May.
The Finance Minister also said that the next meet of Goods and Service Tax (GST) Council will deal with the details of extension of compensation to states beyond 2022, thus confirming Moneycontrol's newsbreak
When the GST came into being, states had agreed to join the new tax regime provided they were compensated for any revenue loss in the first five years, from July 1, 2017 to June 2022.
Sitharaman, who heads the GST Council, had said after a Council meeting in June that there would be discussions on the matter. “There will soon be a special session only to discuss the issue of compensation cess beyond July 2022,” Sitharaman had said.
It was in October 2020 that the Council had decided, in principle, to extend the compensation beyond the original five years.