The Finance Division expects inflation at a moderate level for the remaining months of FY2024 despite the upward revision of administered prices (gas prices).
In its Monthly Update and outlook for December, the ministry said this is on account of a stable exchange rate, contained aggregate demand, better supply position, moderation in the international commodity prices, and favorable base effect.
Moreover, the recent decline in petrol and diesel prices is expected to compensate for the inflationary pressure exerted through higher gas prices as the decline in fuel prices has a significant impact on the common man through reduced transportation and production costs.
Efforts of the sub-national governments to implement lower fares of public transport and freight charges in line with the reduced fuel prices would further ease the inflationary pressure.
The Food and Agriculture Organization’s food price index, which tracks the most globally traded food commodities, averaged 120.4 points in November 2023 unchanged from its revised October level, as increases in the price indices for vegetable oils, dairy products, and sugar counterbalanced decreases in those of cereals and meat.
The index stood 14.4 points (10.7 percent) below its corresponding level one year ago. Keeping in view the better supply position and easing out the imported inflation along with the high base effect will help to contain the inflationary pressure ahead. Inflation is anticipated to remain around 27.5-28.5 percent in December 2023 and further ease out to 24-25 percent in January 2024.
