India must prepare for a long battle against inflation
Rising food prices are a threat that could be tackled through the domestic release of central stocks
Data on inflation released by the Indian government’s ministry of statistics has confirmed fears of a rising-price spectre in the midst of an already-fragile economic recovery. Overall retail inflation in India, based on the consumer price index (CPI), was at 6% and has been rising steadily now since September 2021. This may not look too high, given the double-digit levels seen in the past, but it is the rise in food inflation that is a potential concern. Food inflation was less than 1% in September-October 2021, but shot up to 5.4% overall and 5.9% in urban areas by January 2022. Within food, apart from the usual suspects of fruits and vegetables, it is edible oils that have seen consistently high inflation in their prices, with their average price-rise in the last 18 months at a high 24%. An entrant in this group of specific worries is cereal inflation, which jumped to 3.4% in January after eight months of negative inflation, a good run that was broken last September.