Recovery ‘uneven’, food prices to blame for high inflation: Finance Ministry

‘Revival bumpy, sentiment to improve’

India’s economic recovery after the ebbing of the second COVID-19 wave remains uneven, despite an uptick in several economic indicators through June, the Finance Ministry said on Friday. Consumption sentiment, it added, was likely to improve as recent relief measures announced by the government begin to kick in. Attributing the spike in retail inflation over the last two years to higher food inflation, the Ministry said that prices were expected to cool in the short term from the 6.3% inflation mark reported in May, due to healthy monsoons, gradually rising Kharif crop sowing and unlocking by States. While this would slow food inflation, and thereby headline inflation, the Ministry said input cost pressures and the global spurt in commodity prices remained major risks. Consumption sentiment is expected to pick up due to recent measures such as enhanced employment support (through Employees’ Provident Fund subsidies under the Aatmanirbhar Bharat Rozgar Yojana), and targeted support to the urban poor through the credit guarantee scheme for microfinance institutions and the widening of the BharatNet’s digitisation coverage.