PM Modi calls for close cooperation among countries to tackle inflation

Modi's comments on global inflationary pressures echo observations made in several economic studies and high-profile speeches made last month at the US Federal Reserve's annual conference of central bankers in Jackson Hole.

Prime Minister Narendra Modi has called for close cooperation among countries in tackling inflation as both advanced and emerging economies grapple with higher prices.

In an exclusive interview with Moneycontrol, Modi acknowledged that inflation is a key issue that the world faces, especially as global dynamics have changed due to the pandemic followed by the conflict in Ukraine.

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Modi's comments on global inflationary pressures echo observations made in several economic studies and high-profile speeches made last month at the US Federal Reserve's annual conference of central bankers in Jackson Hole. Trends such as rising trade barriers, ageing populations and a broad transition from carbon-spewing fossil fuels to renewable energy could intensify global inflation pressures in the coming years across the world, the research suggested.

Emphasising that global collaboration is key for inflation management, Modi said that the forum of the G20 finance ministers and central bank governors has acknowledged the need to ensure that policies taken by each country to combat inflation do not lead to negative repercussions in other countries.

"Further, for this, there is an understanding that timely and clear communication of policy stances by the central banks is crucial," Modi said. India's central bank has raised the benchmark repo rate by 250 basis points (bps) to 6.5 percent in 2022-23, but has kept it unchanged so far in 2023-24.

Driven by a surge in vegetable prices, Consumer Price Index (CPI)-led inflation in July jumped to a 15-month high of 7.44 percent. To arrest this spike in food prices, the Union government has already taken a number of steps, ranging from banning the export of non-basmati white rice, and subsidising the retail cost of tomatoes to imposing a 40 percent export duty on onions.

"As far as India is concerned, we have taken a number of steps to control inflation. Even in the face of adversities and global dynamics, India’s inflation was two percentage points lower than the global average inflation rate in 2022," the Prime Minister told Moneycontrol.

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Citing the recent step taken by the Centre to reduce prices of liquefied petroleum gas (LPG), Modi said that though India's inflation is lower than the world average, the Centre is continuing to make pro-people decisions to boost ease of living.

Last month, the Centre reduced LPG cylinder prices by Rs 200 for all 330 million users in the country in a major relief measure ahead of the festive season.