RBI Governor Das Asserts Food Inflation Cannot Be Ignored in Monetary Policy

RBI Governor Shaktikanta Das emphasized that food inflation cannot be ignored when formulating monetary policy. Despite suggestions to exclude it, Das noted that food's 46% weight in consumer price inflation must be revisited, particularly in an environment of persistently high food prices.

RBI Governor Shaktikanta Das made it clear on Thursday that food inflation cannot be excluded when setting benchmark interest rates. He stressed the critical role of food prices, given that they currently account for 46% of overall consumer price inflation, based on 2011-12 data which needs updating.

Das explained that while the Monetary Policy Committee (MPC) might overlook temporary spikes in food inflation, persistently high prices necessitate vigilance to prevent spillover effects. He also mentioned ongoing work by the National Statistical Office to reassess the food price weightage in CPI.

Further, Chief Economic Advisor V Anantha Nageswaran had proposed excluding food inflation from rate setting. However, Das resisted this suggestion, citing that the current monetary policy approach already takes various factors into account, including supply-side pressures and international data.

(With inputs from agencies.)