The government expects an easing of the food prices with the India Meteorological Department (IMD) predicting above-normal rainfall this year, which will lead to higher production, the finance ministry has said in a report.
“Further easing of food prices is on the anvil as IMD has predicted above-normal rainfall during the monsoon season, which is likely to lead to higher production, assuming good spatial and temporal distribution of the rainfall,” the department of economic affairs said in its monthly economic review for March.
India's food inflation declined from 8.7 percent in February to 8.5 percent in March. Vegetable and pulses have been a key challenge to controlling inflation, which continues to remain above the Reserve Bank of India's target of four percent.
To check prices, the government has taken several measure such as strengthening of buffers of key food items and making periodic open market releases, easing imports of essential food items through trade policy measures, preventing hoarding through revision of stock limits, channelling supplies through designated retail outlets etc.
The RBI’s monetary policy committee sees food price uncertainties weighing on the inflation outlook.
“While a record Rabi crop will help in moderating cereal prices, the increasing occurrence of weather shocks poses an upside risk to food prices. Geopolitical tensions and their effect on oil prices add to this risk. However, Kharif crop prospects look bright at this early stage with the IMD’s prediction of an above-normal monsoon this year,” the report said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
