Fuel Excise Duty: Fuel tax cut helps cool worsening price expectations


Indian consumers see price pressures mounting, though the fuel excise duty cut announced by the government late last month tempered inflationary expectations, a survey by the Reserve Bank of India showed.

The median inflation perception of households for the current period increased by 40 basis points, compared to the March round of the survey. It increased by 10 bps and 30 bps for three-months and one-year ahead periods, respectively, the central bank said in a statement Wednesday.

A smaller extension survey after the tax cut showed price growth expectations for the same periods declined by 190 bps and 90 bps, respectively.

The survey comes after the monetary policy committee raised borrowing costs for a second straight month today and pledged to withdraw pandemic-era accommodations. It also raised its inflation forecast for the year that ends in March by a full percentage point to 6.7%.

A separate survey showed Indian consumer sentiment for the current period improved, but remained pessimistic overall. Sentiment on key parameters such as employment and household income improved in the latest round of the survey.


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