Inflation within prescribed limit, says Finance Minister Nirmala Sitharaman

Amid India's highest inflation spike in three decades in November and growing clamour for a clampdown on rising prices, Finance Minister Nirmala Sitharaman Monday said inflation is well within the prescribed limit. However, the government will take action to moderate the prices of edible oil and a few essential edible items, which are on the rise.

The minister made the statement in Lok Sabha while replying to the discussion on the second batch of Supplementary Demands for Grants, authorising the government to spend an additional Rs 3.73 lakh crore during the current fiscal amid protest by the opposition over various issues. The Lok Sabha cleared the supplementary demands.

"...Today inflation is contained well within 6 per cent, which is the permitted limit... Yes, for edible oil and things like that, we are taking measures through the empowered group of ministers. We will attend to the price (rise) in edible oil and some of the essential edible items," Sitharaman said.

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The Reserve Bank of India has been mandated by the government to keep the retail inflation at 4 per cent with a margin of 2 per cent on either side. RBI's monetary policy decisions are based on the movement of consumer price inflation.

Consumer price inflation for November increased to a three-month high of 4.91 per cent and food prices rose. This was despite cuts in excise duty by the government and states, which did not provide much relief in tempering inflation.

However, the wholesale price inflation for November spiked to 14.23 per cent year-on-year. This was a three-decade high inflation print. Also, the wholesale price inflation has remained in double digits since the beginning of the current financial year (2021-22).

Although the RBI does not target wholesale price inflation, it is the wholesale price that follows the rise in retail prices.

The extra spending includes infusing over Rs 62,000 crore into the company that holds residual assets and liabilities of Air India and Rs 58,430 crore by way of additional fertiliser subsidy, among others.

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