Food inflation needs to fall more, says government source

While headline retail inflation rate fell in October, food inflation was little changed around 6.6 percent.

India's food inflation needs to fall more, a senior government official said on November 15, noting that the latest headline retail inflation rate had come down somewhat.

"The headline number has come down, not by much. But food inflation has to moderate more," the official said, requesting anonymity.

Data released on November 13 showed India's headline retail inflation rate fell to a five-month low of 4.87 percent in October, staying within the Reserve Bank of India's (RBI) tolerance band of 2-6 percent for the second consecutive month. However, food inflation was little changed at 6.61 percent, having come in at 6.62 percent in September.

In terms of the price momentum, the Consumer Food Price Index rose 1.1 percent month-on-month (MoM) in October, driven by a 3.4 percent sequential rise in the vegetables index as the price index for onions surged 15 percent. Adding to price pressures was a 3.4 percent MoM increase in prices of eggs, while pulses rose 2.5 percent and cereals 0.8 percent.

The RBI view

The government official's comments come days after RBI Governor Shaktikanta Das said inflation remains "vulnerable to recurring and overlapping food price shocks". Further, in its latest statement on October 6, the Monetary Policy Committee had noted that "unprecedented food price shocks are impinging on the evolving trajectory of inflation and that recurring incidence of such overlapping shocks can impart generalisation and persistence".

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Economists have pointed out that the fall in core inflation - which declined to 4.2 percent in October as per Moneycontrol calculations - is indicative of food price pressures not becoming generalised.

The government has taken a raft of measures over the last couple of years to bring down retail inflation, ranging from export bans on wheat, rice, and onion to the sale of discounted tomatoes, among others.