Food Inflation Likely To Plateau In 2-3 Months, Says Official
Headline CPI inflation spiked to 7.4% in July 2023, from 4.8% in June.
Inflationary pressures are likely to plateau in two to three months, according to a Finance Ministry official.
There are measures in place to control inflation, and no new supply-side steps to curb inflation are currently being discussed, said the official, who spoke on the condition of anonymity.
Headline CPI inflation spiked to 7.4% in July from 4.8% in June.
The view is echoed in the minutes of the Monetary Policy Committee, where RBI Governor Shaktikanta Das expects vegetable price shocks to correct quickly with the arrival of fresh crops.
However, he said that there are risks to the food and overall inflation outlook from El Nino conditions, volatile global food prices, and skewed monsoon distribution—all of which warrant close monitoring.
In its recent monthly economic review for July, the Finance Ministry said that the price pressure on food items is expected to be "transitory", on the back of good performance in the agriculture sector and fresh arrivals in the market. The uneasiness in food inflation would likely subside on the back of proactive government interventions, it said.
"The agricultural sector is picking up momentum with significant advancements in monsoon and kharif sowing. The procurement of wheat and rice has been progressing well, increasing the buffer stock levels of food grains to ensure food security in the country," it said.
Some of the governmental measures include
Procurement and distribution of tomatoes by NAFED and NCCF from farmers to major consumption areas.
Import of tomatoes in early August from Nepal to boost domestic availability.
The import of tur and urad dal has been made free until March 31, 2024.
An import duty of 10% has been slashed on tur dal to boost its domestic flow.
Stock limits have been imposed on tur and urad dal under the Essential Commodities Act, 1955, on June 2 for a period till Oct. 31 to prevent hoarding.
Stock limits have also been imposed on wheat from June 12 till the end of the fiscal.
Exports of non-basmati white rice were prohibited from July 20 to check prices.
