Centre to further bring down inflation, FM Sitharaman tells Lok Sabha; Nov WPI inflation hits 21-month low of 5.85%

Informing the Parliament that the Indian Rupee is strengthening against other currencies, Finance Minister Nirmala Sitharaman on Wednesday said that the government will work for the common man to further bring down inflation.

"Inflation management or control... Prime Minister Modi and his group of ministers and officers are (making) periodic interventions and taking measures as a result of which we find the results coming in," Sitharaman said while replying to supplementary demands for grants for 2022-23 fiscal in the Lok Sabha.

She said the government is constantly watching the price situation of essential commodities. Sitharaman’s statement comes days after official data showed that retail inflation fell to an 11-month low of 5.88 per cent in November, particularly because of the softening prices of food items. 

"We will be able to meet fiscal deficit target of 6.4 per cent of GDP for current fiscal," Sitharaman said. She further said that 54 percent of the capital expenditure target of Rs 7.5 lakh crore for FY23 announced in the Budget was utilised in the first six months of the fiscal. 

Meanwhile, the wholesale price-based inflation fell to a 21-month low of 5.85 per cent in November as prices of food, fuel and manufactured items softened. The WPI (wholesale price index) based inflation has been on a declining trend since May and came down to single digit in October at 8.39 per cent.

Experts said a high base of last year and some easing in food prices also worked in favour of the November 2022 wholesale price index coming in at its lowest level since February 2021 when it was 4.83 per cent.

"Decline in the rate of inflation in November 2022 is primarily contributed by fall in prices of food articles, basic metals, textiles, chemicals & chemical products and paper & paper products as compared to the corresponding month of the previous year," the commerce and industry ministry said on Wednesday.

Though the consumer price index (CPI) based retail inflation declined to 5.88 per cent in November, experts still expect the RBI to hike interest rates by another 25 basis points in its February monetary policy review.

The Reserve Bank had last week said the worst of inflation is behind us, but there is no room for complacency and hiked the benchmark policy rate by 35 basis points to 6.25 per cent.

The central bank also said it will keep 'Arjuna's eye' (keen focus) on the evolving inflation dynamics and projected inflation to remain above 4 per cent for the next 12 months. The RBI keeps a close watch on CPI inflation, which we expect to remain above 6 per cent in December, Bank of Baroda said in a note.