Center blames external factors for skyrocketing retail and wholesale inflation
Sitharaman said the government has reduced the central excise tax on gasoline and diesel prices by Rs 5 and Rs 10, respectively with effect from November 4, 2021.
Posted on 11.30.21, 03:16 AM
The Modi government on Monday blamed external factors – rising international prices for crude and edible oils – for skyrocketing retail and wholesale inflation.
“The upward trend in inflation has been largely driven by exogenous factors, viz. the increase in international prices of crude oil and edible oils which has an impact on domestic inflation due to India’s dependence on imports of these products, ”said Minister of Finance Nirmala Sitharaman at Lok Sabha.
She said October’s Consumer Price Index (CPI) retail price inflation of 4.48 percent is well within the RBI’s 2-6 percent tolerance limit. The rise in wholesale price inflation to 12.54 percent in October was mainly due to “fuel and electricity” and manufactured goods.
The Center has taken several measures on the supply side to curb inflationary pressures. The finance minister said the Center plans to keep a buffer stock of 23 lakh tonnes of pulses to stabilize their prices. The government has also imposed stock limits on certain pulses to prevent hoarding. In addition, tur and urad were classified as free imports until December 31. Tariffs on edible oils have been rationalized and stock limits imposed until March 31 next year to avoid hoarding.
Sitharaman said the central government has reduced the central excise tax on gasoline and diesel prices by Rs 5 and Rs 10, respectively, with effect from November 4, 2021.
“In response, many state governments have also reduced the value added tax on gasoline and diesel,” she said.
. As a result, the retail prices of gasoline and diesel have sobered up, ”she said.
As a further measure to control prices, India has agreed to release 5 million barrels of crude oil from its strategic oil reserves, she said, adding that this release will take place in parallel and in consultation with other major global consumers of energy, including the United States, China. , Japan and Korea.
Rebound of crude
Oil rebounded more than 5% on Monday to over $ 76 a barrel, with some investors viewing Friday’s collapse in oil and financial markets over concerns over the Omicron coronavirus variant as overblown, according to Reuters.
Senior officials from the Organization of the Petroleum Exporting Countries and its allies known as OPEC +, which meets this week, echoed the view, with the Saudi Energy Minister saying that ‘he wasn’t worried about Omicron.
Omicron has created a new challenge for Opec +, which is meeting on December 2 to discuss whether to proceed with an increase in oil production slated for January. OPEC + has postponed technical meetings this week to save time to assess its impact.
Also on the oil market’s radar this week, talks about relaunching the 2015 Iran nuclear deal, which could increase global supply if a deal is struck, resumed on Monday.