Banking Central | Thali cools, but RBI’s inflation battle is far from over

Food prices remains the decisive factor in India's infation story

The Indian thali is getting cheaper, and this time, the drop is hard to ignore. Crisil’s Roti Rice Rate (RRR) for October shows that the cost of a home-cooked vegetarian plate fell 17 per cent year-on-year, while a non-veg thali dropped 12 per cent -- one of the sharpest cool-offs in recent months. If India’s inflation dashboard begins in the kitchen, this is a meaningful print.

Crisil Intelligence director Pushan Sharma attributes the decline primarily to cheaper vegetables and pulses. Tomato prices softened thanks to stronger arrivals from western and southern markets. Potato prices cooled on a high base effect. Onion prices dropped as Rabi 2024-25 stocks hit the market ahead of Kharif arrivals in November. Pulses, too, saw corrections, helped by higher imports of Bengal gram, yellow pea, and black gram. In short, the thali got cheaper not because farmers produced dramatically more, but because supply timing, inventory releases, and imports lined up in the consumer’s favour.

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But there is always the fine print.

Some of this disinflation is calendar-driven, not structural. Crisil warns that onion prices could inch up again in the medium term after excess rainfall in Karnataka and Maharashtra delayed kharif transplantation and created yield concerns. Potato prices, while soft in October, may stay firm in November due to low early rabi supply, only easing after cold-storage stocks start releasing by mid-December. Tomato prices may remain benign for now, cushioned by steady kharif arrivals, but pulses could reverse course. Recent weather disruptions and New Delhi’s 30 per cent import duty on yellow pea could put upward pressure on prices, especially if similar duties extend to other pulses.

What does this mean for the MPC?

India’s CPI trajectory may have turned friendlier this year, but policymakers know better than to trust a single season of food softness. Food still makes up nearly half of the inflation basket. When the thali swings, CPI swings. When CPI swings, rate expectations swing. This makes every vegetable price print a proxy for India’s monetary policy runway.

Does an October thali cool-down bring the RBI closer to easing? Unlikely to be that simple. Because India’s food inflation is not a story of trendlines -- it’s a sequence of disruptions. Because weather shocks are now macro risks, not footnotes. Because import-fuelled disinflation and storage-led supply releases buy time but not stability. And because inflation in India does not fade, it relocates.

For the Monetary Policy Committee, the calculus remains uncomfortable. Cutting rates into temporary food price relief could backfire if onion, potato, or pulses rebound simultaneously in the coming months. Growth impulses may argue for a softer bias, but inflation’s behaviour still urges caution.

(Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector's most important events for readers)