NEW DELHI: Reduction in Central excise as well as state VAT on petrol and diesel is expected to ease domestic inflationary pressure, RBI Governor Shaktikanta Das said on Wednesday.
In a virtual address post the monetary policy meet, the RBI Governor Das said that headline CPI inflation ticked up in October to 4.5 per cent from 4.3 per cent in September, after falling sharply between June and September. This uptick, he said mainly reflected a spike in vegetable prices due to unseasonal rains in some parts of the country.
Besides, Das cited hardening of international energy prices that have kept domestic LPG and kerosene prices elevated for nearly three quarters, edging up fuel inflation to 14.3 per cent in October. "The persistence of high core inflation since June 2020 is an area of policy concern in view of input cost pressures that could rapidly be transmitted to retail inflation as demand strengthens."
"In this context, the reduction of excise duty and VAT on petrol and diesel will bring about a durable reduction in inflation by way of direct effects as well as indirect effects operating through fuel and transportation costs."
Furthermore, he said price pressures may persist in the immediate term. (IANS)
Also watch: