The ministry sought to allay the rating agency's concerns and said economic growth was on an upward swing.
Officials from State-run refiners contend that savings from purchase of Russian oil are used to offset a part of the losses in revenues from selling transport fuels and LPG at State-set rates.
The inflation in the food basket spiked to 7.89 per cent in October 2019 as against 5.11 per cent the preceding month.
Costlier vegetables and eggs pushed up retail inflation to a nearly six-and-a-half year high of 7.61 per cent in October, keeping it significantly above the comfort zone of the Reserve Bank.
Das said that global economic activity has remained fragile and the surge in COVID-19 cases has subdued early signs of revival.
Analysts at Barclays pitched for a 0.25 per cent cut to generate demand advising the central bank to throw caution to the wind.
A 6-7 million tonnes shortfall in rice production due to a fall in paddy sowing area is likely to keep rice prices at elevated levels, adding to the inflationary pressure that the slowing economy is already grappling with. Elevated food prices, including that of cereals, had led to retail inflation reversing a three-month declining trend, to touch 7 per cent in August. Similarly, the wholesale price inflation, which declined to 11-month low, also showed price pressures from cereals resulting from wheat output being impacted by severe heat waves in some parts of the country.
The RBI has targeted 6 percent inflation by January 2016
Food prices are also expected to move up due to the poor monsoons.
Higher inflation has again become a matter of concern for fast-moving consumer goods (FMCG) companies. After prices of commodities like sugar and wheat moved higher and stabilised at those levels, the crude oil too surged, adding to FMCG firms' worries. Besides, a dry spell in August in the ongoing monsoon season impacted rural demand.
From the Sensex pack, HCL Technologies, Infosys, Wipro, Bharti Airtel, Larsen & Toubro, Mahindra & Mahindra, Tata Consultancy Services and Asian Paints were the major gainers. Axis Bank, IndusInd Bank, Bajaj Finance, JSW Steel, State Bank of India and Tata Steel were among the major laggards.
India's industrial production grew by 1 per cent in December, official data showed on Friday. According to the Index of Industrial Production (IIP) data, the manufacturing sector output grew by 1.6 per cent in December 2020.
'The robust tax collections give the finance minister a fair amount of headroom for an expansionary fiscal policy.'
Milk and its products too were less expensive with inflation print of 4.21 per cent, cereals and products at 2.10 per cent, meat & fish at 3.31 per cent while for eggs the prices grew at a slower pace of 8.51 per cent.
The excise duty cut will translate into a reduction of Rs 9.5 a litre on petrol and Rs 7 a litre in diesel after taking into account its impact on other levies.
The RBI targets inflation at 6 percent by January 2016 and 4 percent for 2017/18.
Credit ratings agency Moody's on Monday said the Reserve Bank of India's recent move to hike short-term borrowing and lending rates to tame inflation will put pressure on overall deposit and interest rates.
'...over the long-term can be done only by investing in equities.' 'And during weak macros, one needs t1o allocate more than drawing it down, because they offer the best entry point.'
Recommends delisting of chana futures, open to lowering sugar import duty
To curb soaring inflation, the People's Bank of China, the country's central bank, has raised the benchmark interest rate three times this year.
Inflation indexed bonds assure a positive return over inflation.
China's inflation rate rose to 8.5 per cent in April, bouncing back to hover near 12-year highs, bringing more pressure on government to tame rising prices, identified by it as the "biggest concern".The Consumer Price Index (CPI), main gauge of inflation, rose 8.5 per cent from 8.3 per cent in March and remained close to a nearly 12-year monthly high of 8.7 per cent recorded in February, the National Bureau of Statistics said.
'While intensification of fuel prices and broad-based domestic cost pass-through pressures is a downside risk, core inflation is expected to strengthen further as demand recovers to pre-Covid levels,' the ministry said on Friday.
Prices of various car models -- ranging from entry-level hatchbacks to high-end luxury offerings -- are set to rise as automakers have announced price hikes with effect from January. Carmakers cite an increase in input costs and operational expenses as the main reason to implement price increases from the next month. Industry experts, however, note that the exercise is also undertaken by automakers every year in December to shore up sales volume in the last month of the year, as customers postpone buyouts to later months to get the new year manufactured units.
Tackling inflation will be a priority, the finance minister and RBI governor said on Wednesday, after high prices contributed to painful losses for the ruling Congress Party in state elections.
The overall consumer food inflation in August fell to 5.91 per cent as against 8.35 per cent in July
The rate of price rise in vegetables stood at 15.15 per cent in August as against 16.88 per cent in the previous month.
Since March 2020, WPI food inflation rate continued to fall but the CPI-food inflation rose, signaling a breakdown in supply chain from the mandis to the final household.
The 30 share Sensex ended at 27,550 levels, up by 37 points.
Inflation trajectory does not match the slump in demand, prolonged pause on rates likely.
Currently, the retail inflation is well below the RBI's comfort level. The government has asked the central bank to keep inflation in the range of 4 per cent.
After unseasonal rains, supply disruptions and pandemic-induced woes pushed retail inflation well over the Reserve Bank's comfort zone in 2020, the scenario is likely to stay that way at least in the short term as economic recovery slowly gains foothold. For most part of this year, pricier food items pushed the retail inflation, based on Consumer Price Index (CPI), higher in the range of 6.58-7.61 per cent, except for March when the reading was 5.91 per cent. Experts believe retail inflation is likely to average around 6.3 per cent this fiscal and mostly will remain sticky going forward owing to pick-up in demand across sectors.
Flexibly targeting inflation is consistent with a demand stimulus, says Ashima Goyal.
Deloitte India on Friday said it estimates India's GDP growth at 6.6 per cent in the current fiscal helped by consumption expenditure, exports rebound and capital flows. In its India's economic outlook report, Deloitte said the rapid growth of the middle-income class has led to rising purchasing power and even created demand for premium luxury products and services. With the expectation that the number of middle-to-high-income segments will be one in two households by 2030/31, up from one in four currently, we believe this trend will likely become further amplified, driving overall private consumer expenditure growth, it said.
Inflation in food articles, fuel and power contracted in July.
Andhra Pradesh posted 8.14% consumer inflation in October.
'My advice: Don't mark your portfolio to market every day. Focus on survival.'
Global oil prices have slumped and India has access to larger amounts of discounted Russian crude oil, yet refiners are not passing on their savings to consumers
The rise in May Wholesale Price Index based inflation has been mainly on account of 31.44 per cent increase in prices of potato, 19.40 per cent in fruits and 12.75 per cent in rice.
The Survey is authored by Chief Economic Advisor V Anantha Nageswaran and his team.
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