Mumbai: RBI Governor Shaktikanta Das said on Thursday that the food inflation cannot be overlooked considering its high share in the consumption segment, The Indian Express reported.
Mooting this point, Shaktikanta Das was differing from Chief Economic Advisor V Anantha Nageswaran, author of Economic Survey for 2023-24, who in it suggested excluding food prices from ‘headline inflation’.
“First and foremost is the fact that our target is the headline inflation wherein food inflation has a weight of about 46 per cent. The public at large understands inflation more in terms of food inflation than the other components of headline inflation.” Das was quoted as saying.
Governor Das further said that “With the high share of food in the consumption basket, food inflation pressures cannot be ignored.”
The remark came after the RBI’s Monetary Policy Committee (MPC) has kept the Repo rate unchanged at 6.5 per cent for the ninth consecutive time, even as the “persisting high food inflation” continued to be a risk, according to the report.
Meanwhile, the Central bank put the 2024-25 retail inflation projection at 4.5 per cent while the gross domestic product (GDP) growth at 7.2 per cent.
Food inflation contributed to above 75 percent of headline inflation in May and June, thanks to its weight of around 46 per cent in the consumer price index (CPI) basket.
Obviously considering this point Governor Das said: “Therefore, we cannot and should not become complacent merely because core inflation has fallen considerably.”
Announcing the monetary policy, Das reportedly pointed out: “The MPC judged that it is important for monetary policy to stay the course while maintaining a close vigil on the inflation trajectory and the risks thereof. Resilient and steady growth in GDP enables monetary policy to focus unambiguously on inflation. It must continue to be disinflationary and resolute in its commitment to aligning inflation to the target of 4 per cent on a durable basis.”
When his views on excluding food from retail inflation were sought, Das said: “I don’t have any personal view. These all are institutional views. The NSO (National Statistical Office) survey is on and depending on the data, a decision will be taken at the appropriate time between the government and the Reserve Bank.”