Economic Survey shows Inflation eases down marginally to 4.9% from 5.4%

According to the Economic Survey 2024-25, India’s inflation has slightly eased over the past year. The report highlights that core inflation has been cooling, bringing down overall price increases but in reality, food prices, particularly vegetables and pulses continue to fluctuate due to extreme weather events and supply chain disruptions.

Inflation Trends: Prices Coming Under Control

The Consumer Price Index ( CPI ) inflation, which measures the increase in prices of goods and services, has declined from 5.4% to 4.9%. This means that prices are still rising but they are doing so at a slower pace.

Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access, Click Here

One major reason for this slight relief is the stability in core inflation, which excludes highly volatile items like food and fuel. The government has also taken steps to control food inflation, which was a major concern in previous years.

Food Prices Still Unstable Due to Weather Shocks

Despite the easing of overall inflation, food inflation has increased from 7.5% in FY24 to 8.4% in FY25 so far. The survey highlights that vegetables and pulses, which make up 8.42% of the Consumer Price Index ( CPI ), have contributed a staggering 32.3% to overall inflation this year.

The primary reasons for this surge include:

• Extreme Weather Events – Vegetables are more affected by cyclones, droughts, and heavy rainfall compared to food grains.
• Supply Chain Disruptions – Unpredictable climate conditions have delayed harvests and reduced yields, leading to price spikes.
• Global Trends – Rising agricultural prices worldwide and fluctuations in trade policies have added to domestic inflationary pressures.

Get a Copy of Direct Taxes Law and Practices Including Tax Planning with Free E-Book Access, Click Here

Government Measures to Control Inflation

In response to rising food prices, the government has taken several steps to control inflation, including:

1. Stock Limits on Essential Commodities – Restrictions on wheat and pulses holdings to prevent hoarding.
2. Open Market Sale Scheme (OMSS) – Releasing wheat and rice stocks to stabilize prices.
3. Subsidized Sale of Onions & Tomatoes – Direct government intervention to lower retail prices.
4. Duty-Free Imports – Removing import taxes on pulses like tur, urad, masur, and yellow peas to boost domestic supply.
5. Buffer Stock Policy – Maintaining reserves of essential food items to counter price shocks.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates