Inflation at five year low

Reacting to sharp fall in inflation, finance minister Arun Jaitley said that it is heartening to note that BJP-led NDA government has been able to bring food inflation under control. “We are confident that soon we will be achieving a low and stable inflation rate,” said Mr Jaitley.

The inability of UPA II regime to reign in high inflation was seen as one of the reasons for the loss of Congress in the Lok Sabha elections as along with a slow economic growth increased people’s hardship. Mr Jaitley said that the growth in vegetable and protein prices that have been contributing to the recent increase in inflation rates have shrunk “thanks to the steps taken by the government.”

“We are committed to continuing reforms in food markets that will improve supply responses and keep inflation low and stable,” said Mr Jaitley. At the same time, fiscal consolidation and a new monetary policy framework will help bring down inflationary expectations, he added. According to the inflation data, the food inflation fell to a nearly 33-month low of 3.52 per cent. Vegetables inflation contracted by 15 per cent in September against an increase of 91 per cent witnessed in the same month last year. Onion prices fell by 58.12 per cent as compared to rise of 355 per cent in September 2013.

However, potato inflation increased by 90 per cent in September. Inflation of meat, egg and milk shrank by 4 per cent. Fuel inflation came off to 1.3 per cent buthas yet to reflect the full extent of the drop in international crude prices. The core WPI inflation fell to 2.8 per cent in September from 3.5 per cent in August. “If diesel prices are reduced, it would add a further softening bias to the inflation readings,” said ICRA’s senior economist Aditi Nayar.