Inflation & Prices
India’s RBI Must Retain Focus on Food Inflation, Economists Say
- Economic Survey said reining in food inflation not RBI’s job
- Food makes for half of headline CPI index targeted by the RBI
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A top Indian government adviser’s suggestion that policymakers cut out volatile food prices while targeting inflation met with skepticism from many economists, who say it’s inappropriate to ignore the costs of everyday items that consumers can’t do without.
The prescription for inflation-minus-food found mention in the government’s pre-budget Economic Survey published last week. The report’s author and India’s Chief Economic Adviser V Anantha Nageswaran argued that since interest rates can’t control the prices of food, deploying short-term monetary policy tools “to deal with inflation caused by supply constraints may be counterproductive.”