{"id":134579,"date":"2021-09-16T20:38:41","date_gmt":"2021-09-16T15:08:41","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=134579"},"modified":"2021-09-17T19:04:03","modified_gmt":"2021-09-17T13:34:03","slug":"transient-easing-on-inflation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/transient-easing-on-inflation\/","title":{"rendered":"Transient easing: On inflation"},"content":{"rendered":"\n

Synopsis<\/strong>: Cutting fuel taxes is a sure-shot way to address a major component of price pressures.<\/p>\n

Introduction<\/strong><\/h5>\n

The latest retail inflation data suggest, that price pressures have begun to moderate in the economy, with CPI showing inflation having slowed for a second month to 5.3%, after July\u2019s 5.59%.<\/p>\n

However, price trends among the constituents of the Consumer Price Index and the Wholesale Price Index-based inflation<\/strong>, show that it would be premature to drop the guard on price gains.<\/p>\n

Why it is necessary to control price gains?<\/strong><\/h5>\n

Contradictory inference of softening inflation<\/strong>: the year-earlier inflation reading was elevated which passed a favourable base effect. However, the CPI nudged up 0.25% from July, contradict the inference of softening inflation.<\/p>\n

Price gains of essential food items<\/strong>: In at least three essential food components price speeded up from the preceding month, with meat and fish, dairy and oils and fats posting significant rise.<\/p>\n

Same scenario is with edible oils and an earlier round of cuts in import duties have had little impact in cooling their prices.<\/p>\n

Inflation in vital protein sources<\/strong>: price rise of eggs and pulses also continued to remain a cause for concern. However, a wider deflation in vegetable prices was the main positive contributor to the easing in overall food and beverages inflation last month.<\/p>\n

Higher transportation costs:<\/strong> The pace of inflation in fuel and light<\/strong>, clothing and footwear, health as well as household goods and services all saw a contraction last month.<\/p>\n

Transport and communication, which includes pump prices of the main automotive fuels of petrol and diesel, stayed stuck in double digits at 10.2%.<\/p>\n

The WPI data show higher transportation costs combined with input price pressures ignite faster inflation in manufactured products as well.<\/p>\n

PMI survey:<\/strong> the outlook for inflation is far from positive<\/strong> for services, as the input costs rose in August at the fastest rate in four months. Also, as per a recent CII poll of CEOs, a majority 67% expect average retail inflation this year to exceed the RBI\u2019s mandated monetary policy<\/strong> upper threshold of 6%.<\/p>\n

What is the way forward?<\/strong><\/h5>\n

First, policymakers need to be well aware that inflation is not just about a point reading, but about consumers\u2019 and businesses\u2019 expectations<\/strong> of the trend in prices. Fears of future high inflation dampen sentiment and thus retard economic activity.<\/p>\n

Second, government need to consider cutting fuel taxes to address a major component of price pressures.<\/p>\n

Source<\/strong>: This post is based on the article \u201cTransient easing<\/strong>\u201d published in the Hindu<\/strong> on 16th September<\/strong> 2021<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Synopsis: Cutting fuel taxes is a sure-shot way to address a major component of price pressures. Introduction The latest retail inflation data suggest, that price pressures have begun to moderate in the economy, with CPI showing inflation having slowed for a second month to 5.3%, after July\u2019s 5.59%. However, price trends among the constituents of… Continue reading Transient easing: On inflation<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[9794,216,3337,8940],"class_list":["post-134579","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-consumer-price-index","tag-gs-paper-3","tag-inflation","tag-monetary-policies","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704696741},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/134579","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=134579"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/134579\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=134579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=134579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=134579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}