Rising food prices are slowing down the process of tackling inflation, said RBI Governor

Shaktikanta Das, Governor of the Reserve Bank of India (RBI), addressed inflation in a programme on Tuesday. The central bank governor stated that the RBI is attempting to bring retail inflation to the objective of 4%, but that due to increased food costs in the country, the disinflationary process is taking longer than expected. Speaking at a programme, Das stated that rising food costs are causing opposition to the inflation control process. It is stubborn and at a high level. The main cause for this is supply-related problems. It is also influenced by weather conditions. Das emphasized that, as seen in other developed economies, the process of disinflation slows considerably in its final stages.

"There are a lot of uncertainties; food inflation remains persistently high. Average food inflation has been around 8 percent in the last seven months," Das said. India's core inflation reading has eased substantially and it reached a historic low of 3 per cent in May.

The RBI has been consistently expressing concern over rising food prices. After the recent MPC meeting, RBI Governor Das had termed inflation as a slow-moving elephant. Retail inflation based on the Consumer Price Index declined to a one-year low of 4.75% in May. However, inflation in the food articles category eased marginally to 8.69 percent, from 8.70 percent in April. Similarly, Wholesale Price Index (WPI)-based inflation reached a 15-month high of 2.61 percent in May.

Wholesale inflation for food items rose to a 10-month high of 9.82 percent in May. Vegetable inflation was 32.42 percent in May, up from 23.60 percent in the previous month. Onion inflation was 58.05% and potato inflation was 64.05%.