Rural prosperity is fuelling food inflation: Subbarao

RBI Governor D Subbarao has said that rising prosperity in rural India is leading to food scarcity, which is driving up food prices.

"Since rural incomes are going up, people are eating better by shifting from cereal to protein (rich diet) and it is leading to food scarcity," Subbarao told students of the Indian Institute of Technology (IIT), Bhubaneswar yesterday.

Food inflation, which has been hovering in double digit levels for the last few months has been a cause of concern for the government. It rose to 11.49% for the week ended February 12 from 11.05% in the previous period, driven by rising prices of milk, egg, meat and vegetables.

"RBI is responsible for management of inflation. But responsibility for food inflation is slightly lower because food inflation arises due to supply side constraints," Subbarao said.