NEW DELHI: The government's price cuts on LPG, petrol, and diesel have led to a reduction in LPG and petroleum product inflation in the country, according to Economic Survey. The survey, tabled in Parliament on Monday, also noted a sharp decline in the global energy price index in FY24, which contributed to sustained low retail fuel inflation.
In August 2023, the price of a domestic LPG cylinder was reduced by Rs 200 nationwide, resulting in a deflationary LPG inflation rate since September 2023. Additionally, in March 2024, the price of non-subsidized LPG cylinders was further reduced by Rs 100 per cylinder, according to the survey. Similarly, in March 2024, Oil Marketing Companies lowered petrol and diesel prices by Rs 2 per litre, which also pushed retail inflation for these fuels into the deflationary zone.
The survey highlighted that global commodity prices fell in 2023, easing price pressures in energy, metals, minerals, and agricultural commodities through the imported inflation channel. Low fuel and core inflation contributed to a downward trend in headline inflation, despite food price volatility in FY24.
"Thus, the moderation in inflation was largely due to prudent administrative measures and monetary policies implemented during the post-pandemic economic recovery phase," the survey states.
According to the Economic Survey, the global economy faced another wave of supply chain disruptions post-pandemic, beginning with the Russia-Ukraine war in the first half of FY23. However, in the latter half of FY23 and FY24, global inflation declined due to the waning effects of price shocks, particularly in energy prices, along with lower core inflation and monetary tightening.