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Resource centre on India's rural distress
 
 

Is crude, edible oil inflation relief on the cards for India? -Roshan Kishore

-Hindustan Times

The fuel and energy basket sub-component has a share of 6.84% in the CPI basket. For oil and fats (edible oil) sub-category, this share is 3.56%. A simple calculation using the weighted share of these two sub-components shows that they have been a key driver of headline inflation in the past few months.

India’s benchmark inflation rate, as measured by the Consumer Price Index (CPI) has been above the 6% mark – the upper limit of RBI’s comfort band under the inflation targeting framework – for six consecutive months now. While most economists, including those in the Monetary Policy Committee (MPC) of RBI expect inflation to stay above this threshold for the rest of this calendar year, some relief could be on way via the two critical oils in India’s CPI basket: crude petroleum oil and edible oils. While that could ease some pressure on the inflation front, the squeeze on household budgets may still remain.

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