India's inflation should ease in the coming months following steps taken by the Union government and as global prices coming off in May will have a salutary impact, Ajay Seth, secretary at the department of economic affairs, said on May 30.
"The prices of commodities in May have moderated from their peaks," Seth told reporters in New Delhi. "We do expect in the coming months, inflation should be moderating. And for that whatever measures were needed from the fiscal side, those have been taken and as far as monetary authority is concerned, RBI is also taking measures."
India's retail inflation, key price gauge for the Reserve Bank of India (RBI), has stayed above the central bank’s target for over two years and the wholesale index has stayed in double digits for a year. Consumer Price Index (CPI) inflation surged to near-eight-year high at 7.79 percent in April.
In April, the central bank normalised its policy rate corridor to pre-pandemic width and sprang a surprise with an off-cycle rate hike in May as it pre-empted the inflation shocker. It has since warned that more rate hikes are in the offing.
The recent import duty tweaks will have a net impact of Rs 10,000 crore to Rs 15,000 crore this financial year, said Vivek Johri, chair of the Central Board of Indirect Taxes.
Meanwhile, it is not possible to predict what future steps are likely, Secretary Seth told reporters, citing the dynamic global situation.
On how much the hit to growth this fiscal year could be, he said no rating agency was talking about a number lower than the budget assumption of 7.5 percent year-on-year growth.