India’s inflationary woes, it seems, are unending. Data released on Thursday showed that prices of food articles galloped 8.55% for the week that ended on 14 May, up from 7.47% for the week before on a year-on-year basis. This is contrary to expectations that food prices were cooling and the bigger danger now was from core inflation and not food prices.
This may just be the start of another inflationary round. The government is likely to take a decision soon on increasing the price of diesel. If the price is raised, it will inflame the price of food items very quickly—diesel being the fuel of choice for the transport sector.
It is a moot point now as to when and how fuel prices should have been raised to minimize their inflationary impact. Clearly, no thought was spared for this important sequencing issue. Inflation is now the No. 1 threat to macroeconomic stability.