Inflation in India: Food for thought
Neither the RBI nor the government (esp. the FM) can be happy about the latest jump in inflation to above 6.0%, or as Bloomberg puts it: ” . . . remaining above the central bank’s target for an 18th week, because of higher prices for wheat and vegetables”.
Inflation is being fueled by farm costs, which are rising at twice the pace of prices of manufactured products.
Rising prices may have alienated voters, who ousted Prime Minister Manmohan Singh’s Congress party in two state elections in February. Singh wants to tame inflation as the party faces a month-long poll in the northern state of Uttar Pradesh, the country’s most populous. The election will set the tone for national elections in about two years.
Here’s the breakdown of the inflation measure, courtesy of CMIE:
Up next week: Phase 4 of Uttar Pradesh elections, Monetary policy announcement by the RBI.
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