Food inflation will decline as India grows, according to an MPC member

The problem of high food inflation in India will be "less severe" in the future as modern supply chains with diverse sources can help deal with sudden spikes in prices of specific food items. These things were said by Ashima Goyal, a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India on Thursday.

Emphasizing that the share of food in the household budget in India is high, Goyal said policies need to focus on increasing agricultural productivity, as stable agricultural prices are important for growth beyond inflation.

Goyal said, “As India develops, the severity of this problem (high food prices) will reduce due to many reasons. “Modern supply chains with diverse sources will help us cope with rising prices of specific commodities.”

Goyal said no one has heard of tomato or onion prices rising in advanced economies. “We have naturally diverse geographies, and better-integrated markets across regions can help mitigate climate change-induced food price increases,” he said.

According to official data, retail inflation fell to a five-month low of 4.85 percent in March, mainly due to lower food prices. Inflation in food articles stood at 8.52 percent in March, which was 8.66 percent in February. Reserve Bank of India (RBI) Governor Shaktikanta Das recently said that inflation will decline to 4.5 percent in 2024-25. It was 5.4 percent in 2023-24 and 6.7 percent in 2022-23.