Monetary policy can't rein in food inflation: RBI

Rising food prices have been a concern for the last few months, but the response to food inflation is beyond the monetary policy, according to RBI Deputy Governor Subir Gokarn.

“The dynamics of food prices is not the result of one or two failed monsoons,” Gokarn said on the sidelines of the statistical day seminar organised by RBI.

He said the rise in food prices was due to a combination of shifting consumption patterns, which was pushing up the demand for primary articles like pulses, even as productivity of the agriculture sector reached stagnation.

“As affluence spreads, there is diversification in food consumption patterns. There is a greater emphasis on protein-rich items, resulting in higher demand for pulses and milk. The significant part of the rise in food prices was structural in nature,” he added.

India’s food inflation rose to 17.60 per cent in the week ended June 12 from 16.86 per cent in the previous week. This rise was mainly due to a hike in the prices of fruits, vegetables, and spices.

Gokarn also pointed out that capacity constraints as well as deficient rainfall have affected productivity in the farming sector.