High crude oil price, 7th pay commission payout led to rise in inflation, says Arun Jaitley

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Updated: December 22, 2017 5:19:50 PM

Finance Minister Arun Jaitley has said that higher inflation last month was due to the 7th Pay Commission pay-out and the higher oil prices.

Finance Minister Arun Jaitley has said that higher inflation last month was due to the 7th Pay Commission pay-out and the higher oil prices. (Image: PTI)

Finance Minister Arun Jaitley has said that higher inflation last month was due to the 7th Pay Commission pay-out and the higher oil prices, CNBC-TV18 reported on Thursday. He also said that the Foreign Exchange Reserve was high and the current account deficit (CAD) was within limits.

Similar views were shared by Reserve Bank of India governor Urjit Patel. He recently said that India’s market is stable despite geopolitical uncertainties and the current account deficits are also within the sustainable limit. However, at the last meeting of the monetary policy committee (MPC), he added that the recent upturn in crude oil prices has emerged as a cause of concern.

The Retail Inflation for November surged to a 15-month high at 4.88%, breaching the 4% target set by the RBI. On December 6, given the concern over rising inflation, the central bank kept the repo rate unchanged at 6%, and stance neutral, saying that its decision will depend on data.

The rural inflation also rose to 4.79% from 3.36% in October, while the urban inflation at 4.9% rose to 4.9% from 3.81% in October. According to economists, rising commodity prices globally and a new pay revision for government employees may have led to the rise in inflation. November’s heavy rains “created lots of damage” for perishable fruit and vegetable crops, said Rupa Rege Nitsure, group chief economist at Larsen & Toubro. “We have seen that translated into price rises for onions, tomatoes and other perishable commodities”.

First published on Thursday, 21 December 2017 on www.financialexpress.com

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