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Price situation under control: Arun Jaitley

Attributing rise in prices of certain food items to seasonal factors, Finance Minister Arun Jaitley today said inflation overall is moderating and the price situation is under control.

“During the monsoon period because of seasonal variations, (prices) of some products go up. But overall inflation continues to moderate and seems to be under control,” he said.

The Finance Minister was responding to a query on the WPI and CPI Data released earlier in the day.

The inflation calculated on Wholesale Price Index (WPI) during August continued to remain in negative territory for the tenth month in a row, while the one measured on Consumer Price Index (CPI) has touched a new low.

WPI shrunk 4.95 percent compared with (-)4.05 percent in July 2015 on the strength of sharp declines in the prices of fuel and commodities.

While, the CPI-based inflation declined to 3.66 percent in August compared with 3.69 in July 2015, although prices of some items including that of pulses moved up.

As per the CPI data, food inflation inched up marginally to 2.2 percent in August from 2.15 in the previous month. The WPI data showed onion and pulses turned costlier compared to July.

Chief Economic Advisor Arvind Subramanian said the key point in the data is that the core momentum has decelerated over the last three months “so that’s also an encouraging sign of abetting inflationary pressures”.

The Finance Ministry in a statement said the core inflation (excluding food and fuels) decelerated to 4.1 percent in August from 4.3 percent in July.

Ficci President Jyotsna Suri said “Under the present circumstances, it would be most appropriate for the RBI to give weight to growth considerations and announce a deeper cut in the policy rate”.

The Reserve Bank’s next bi-monthly monetary policy review is on September 29. While deciding on the key interest rate it mostly tracks the CPI-based inflation, the recent data for which will be released later in the evening. CPI in July was at record low of 3.78 percent.

Economic Affairs Secretary Shaktikanta Das said there has been a considerable improvement in the price situation.

“RBI will take a considered call on the issue. There is no divergence in perception. The government and RBI are working together. Taking into account the overall factors, RBI
will take a considered call,” he said.

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