Prices to fall.

"The Consumer Price Index (CPI)-based inflation stood at 5.69% in December, as compared with 5.55% in November, according to data from the Ministry of Statistics and Programme Implementation (MoSPI)." "Core inflation, excluding volatile food and fuel, eased further to 3.9% in December, as compared with 4.12% in November." Cereal prices rose 9.93%, pulses rose by 20.73% and vegetable prices rose 27.64%. NDTV. The mandate for the Reserve Bank (RBI) is to keep CPI inflation at 4% with a rare deviation of 2% up or down. ET. So what is the RBI's response? A big yawn and a shrug. In fact, "RBI governor Shaktikanta Das has said that the central bank has managed to moderate inflation without compromising its growth focus." TOI. Why such cold indifference? Because inflation is mainly driven by the prices of food and this depends solely on supplies which cannot be improved through monetary policy. Food, especially vegetables, are transported by trucks and trucks run on diesel. Diesel prices in India vary between Rs 82.12 and Rs 99.84 per liter. NDTV. Petrol prices are even higher. In the US, the price of diesel varied between $3.531 and $5.152 per US gallon, which converts to about 3.8 liters (byju's). Taking an average price of $4 per gallon and the dollar at Rs 82.90 (xe.com), the price of diesel works out to about Rs 87.26 per liter. Petrol is cheaper in the US. Prices are so much higher in India due to taxes. In December 2021, Finance Minister Nirmala Sitharaman revealed that the government had earned Rs 8.02 trillion in the last 3 financial years. ET. In March 2022, the Congress asked the government to account for Rs 26 trillion in excise duty on petroleum products in the preceding 8 years. BT. "India's high inflation problem over the last couple of years" has been "because of high tax/cess and the government's failure to pass on the benefits of lower import cost (when crude oil price was low) - had a cascading effect on firm-level transport costs, leading to a higher cost-push inflation in CPI - from which most companies (no just OMCs) profited at the expense of the poor," wrote Prof Deepanshu Mohan and Yashovardhan Chaturvedi. OMCs (oil marketing companies) are state owned so the government rakes in trillions in taxes and then forces the OMCs to pay enormous dividends. Win-win for the government, the middle finger to the people. However, as if by magic, "Price-tags for most household, personal and food products will fall in the next few months with consumer companies rolling out products with increased grammage or pack weight especially for small packs priced at Rs 5-20." ET. With Houthi attacks on shipping in the Red Sea expected to increase inflation in the rest of the world (Fx Empire) how and why can companies in India reduce prices? Has the government made them an offer they can't refuse? The Indian Godfather is more lethal than Don Corleone. Nothing is impossible.