New Delhi: Food inflation surged to 17.47% in the third week of November, fuelled by expensive onions and other essentials, prompting experts to ask the Reserve Bank of India (RBI) to tighten its monetary stance.
RBI itself was in agreement that it would have to reassess the accommodative policy stance going forward, since the economy is on a rebound and prices were rising.
While monetary policy does not have a direct bearing on bringing down prices of food products, the demand for tightening money supply is directed towards preventing food inflation from spreading to manufactured items.
Food inflation stood at 15.58% a week ago.
On a weekly basis, onion prices rose 12%, while it surged 30.89% on a yearly basis. Pulses were up 37%, while rice, wheat, fruits and milk were 10% costlier year-on-year. But the rise in potato prices fell to 94.17% on a yearly basis, against an over 100% increase a week ago.
“Food prices must be controlled, otherwise they have a tendency to lead to manufacturing inflation... This will require monetary action by RBI, especially (money) supply management,” Prime Minister’s economic advisory panel chairman C. Rangarajan said.
RBI deputy governor Usha Thorat said: “Clearly now going forward, it (accommodative policy) will have be to reassessed. WPI (Wholesale Price Index) inflation...now we are looking at 6-6.5% till March with upward bias. CPI (Consumer Price Index) inflation is still elevated.”