NEW DELHI: Finance Minister Nirmala Sitharaman on Monday said retail inflation is now “stable” and temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions.

In a written reply to the Lok Sabha, Sitharaman said India’s retail inflation has declined from an average of 7.1 per cent in April-October 2022 to 5.4 per cent in the corresponding period of 2023.

“The retail inflation is now stable and within the notified tolerance band of 2 per cent to 6 per cent. A steady decline in core inflation, estimated after removing volatile food and fuel items from retail inflation, has been critical in weakening the inflationary pressure in the Indian economy,” she said.

The core inflation rate has declined from 5.1 per cent in April 2023 to 4.3 per cent in October 2023.

The minister said retail inflation in India has been mostly within acceptable limits after the notification of the inflation tolerance band in 2016.

“Temporary increases in inflation on a few occasions are caused by demand-supply mismatches arising out of global shocks and adverse weather conditions,” Sitharaman said.

Proactive supply-side initiatives by the government and effective demand stabilisation measures by the RBI have helped resolve the demand-supply mismatches and rein in inflation, she added.