Fuel duty cuts likely to help ease retail inflation by up to 25 bps

The Union government’s move to cut excise duty on petrol and diesel by Rs 8 and Rs 6 a litre, respectively, is likely to ease the retail inflation rate by up to 25 basis points (bps) from June onwards. If the move’s indirect impact on other items, including food prices, is also considered, the average inflation rate may reduce by 40 basis points during the current fiscal year.  

Since only nine days are left this month, the measure may impact the consumer price index (CPI)-based inflation rate by 7-8 bps only.

According to Devendra Pant, chief economist, India Ratings and Research, “The step is likely to have an impact of around 20-25 bps from June onwards, while in May, the