CPI inflation not a problem, need to guard against seasonal upsurges: Srivastava

In the post-pandemic world, retail inflation has emerged as a pain point for the global and Indian economy. The CPI inflation in India rose to a three-month high pace of 5.55 per cent in November from 4.87 per cent in October. Food inflation has been a key driver of rising retail inflation. However, DK Srivastava, Chief Policy Advisor of Ernst and Young while speaking to Republic Business said that the inflation in India around 5.4- 5.5 per cent on an annual basis as projected by the RBI is acceptable in the global context where many other economies are suffering much higher inflation rates.

“We also can draw some comfort from the fact that the WPI inflation is close to zero, right or rather low. And the implicit price deflator which is a weighted average of these two CPI and WPI would be just a little above 2 per cent,” Srivastava said. According to him, out of the three indicators of inflation, two are well under control. It is CPI only which is higher than the average benchmark of 4 per cent but it is still below the upper tolerance limit of 6 per cent. 

“Overall CPI inflation is not a problem, but seasonal upsurges in certain prices and vegetable prices from time to time are the ones that we need to guard against. And then, of course, suitable responses through curbs on exports or timely imports would help us,” he added further. While speaking on the interim budget, veteran economist Srivastva told Republic Business that the government is not likely to make any big-bang announcement today. “ I think they have already announced the extension of the food program. And that is also a significant commitment,” he added.

“They can possibly give an indication of a welfare-oriented budget, but beyond that, I don't think they can make a big-bang announcement,” he said.