Finance Ministry Positive On Food Inflation Outlook, Says Future Bright For Indian Economy

The ministry noted that the average crude oil free on board (FoB) price for the Indian basket stood at $82.2 per bbl during FY24, down from the average of $93.2 per bbl in the preceding FY23

Food prices are expected to moderate in the coming months, the Finance Ministry said on Tuesday. Giving its inflation outlook in the monthly economic report, the ministry said that it remained optimistic about the inflation levels in the country and projected food inflation to reduce soon in the coming months. 

The ministry also forecasted a positive view for headline inflation rates and added that the overall possibilities for the Indian economy seem bright, reported CNBC TV18. Earlier in its monetary policy committee meeting this month, the Reserve Bank of India also gave a revised projection for inflation for the last quarter of the current fiscal year. The banking regulator estimated that inflation levels would improve in the January-March quarter in 2023-24 fiscal year to 5 per cent, from the earlier projection of 5.2 per cent in the last MPC meeting.

At the same time, the Ministry expressed caution against the downside risks to trade, including factors like a possible rise in new commodity prices from geopolitical events, consistent attacks in the Red Sea, and disruptions in supply. It stated that these factors could cause tension in monetary conditions and impact the global demand recovery.

The ministry noted that the average crude oil free on board (FoB) price for the Indian basket stood at $82.2 per bbl during the 2023-24 fiscal year, down from the average of $93.2 per bbl in the preceding 2022-23 fiscal year.

Further, the core inflation rate for the current fiscal year , till January 2024, stood at the lowest levels since the 2020-21 fiscal year, pointing out that a positive environment remained for output growth and overall inflation.

At the same time, due to the uncertainties present in the global output and trade growth, the ministry underrated the immediate need for India to boost its export competitiveness and attractiveness.

The official body stressed that lower output prices and overall inflation impacted output growth positively, it remained key to take notice of the existing challenges and find ways to enhance exports to capitalise on the potential of the Indian economy.