Govt has prohibited exports of wheat flour, rice; impact will be felt in coming weeks: FM Sitharaman on inflation

New Delhi [India], September 12 : Finance Minister Nirmala Sitharaman on Monday said that the moderate increase in inflation during the July to August period was due to an increase in food and fuel prices.
She added that the government had prohibited exports of food products like wheat flour, rice, maida, etc to keep domestic supplies steady and the impact of these measures is expected to be felt more significantly in the coming weeks and months,
"The headline inflation based on retail CPI recorded a moderate increase from 6.71 per cent on July 22 to 7.0 per cent on August 22. This increase is attributable both to an adverse base effect and an increase in food & fuel prices - the transient components of CPI inflation," the Finance Minister said in a tweet.
She added that core inflation calculated by excluding the transient component of CPI viz. "food and beverages" and "fuel and light" was recorded at 5.9 per cent in August 2022, remaining below the tolerance limit of 6 per cent for the fourth consecutive month.
"Prices of major inputs like iron ore & steel have sobered in the global markets. This coupled with the measures taken by the Govt to rationalize tariff structures of inputs to augment domestic supply has helped to keep cost-push inflation in consumer items under control," she added.
Sitharaman said that despite erratic monsoons and negative seasonality in vegetable prices, food inflation in July was still lower than the April peak of the current year. With global inflation pressures, inflationary expectations remain anchored in India with stable core inflation, she added.
"IIM-Ahmedabad's One-year ahead Business Inflation Expectations Survey in July 2022 has declined by 34 bps to 4.83% from 5.17% in June. Inflation expectations have fallen below 5% after 17 months," she said adding in another tweet.
To soften the prices of edible oils & pulses, tariffs on imported items have been rationalized periodically & stock limits on edible oils have been kept, to avoid hoarding. Inflation in "oils and fats" &"pulses and products" has moderated to 5.62 per cent & 2.52 per cent respectively, she added.
"Government has prohibited exports of food products like wheat flour/atta, rice, maida, etc to keep domestic supplies steady and curb the rise in prices. The impact of these measures is expected to be felt more significantly in the coming weeks and months," Sitharaman added.
Sitharaman's comments came after India's retail inflation rose to 7 per cent in August from 6.71 per cent in the previous month due to a rise in food prices, as per the government data released on Monday.
Retail inflation has been above the Reserve Bank of India's tolerance band for the eighth consecutive month. With the headline inflation coming above 6 per cent for the eighth month in a row, the RBI is on a brink of failing to meet its inflation mandate.
The RBI is mandated to keep inflation in a range of 2-6 per cent. The RBI is deemed to have failed in its mandate if the average inflation remains outside the 2-6 per cent band for three consecutive quarters.
Retail food inflation surged to 7.62 per cent in August as against 6.75 per cent recorded in the previous month. There was a sharp jump in vegetable prices. Inflation in vegetables soared to 13.23 per cent in August. In August, the price rise was sharper in rural areas than the urban areas.
Rural inflation surged to 7.15 per cent in August from 6.8 per cent in the previous month. Urban inflation jumped to 6.72 per cent in August from 6.49 per cent in July 2022, as per the data released by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).
The Price data are collected from selected 1114 urban markets and 1181 villages covering all States/UTs through personal visits by field staff of the Field Operations Division of NSO, MoSPI on a weekly roster. During the month of August 2022, NSO collected prices from 99.9 per cent villages and 98.4 per cent urban markets while the market-wise prices reported therein were 89.6 per cent for rural and 92.8 per cent for urban.