Vigilance needed on food inflation: RBI on unseasonal rains

We have to be more careful in food management and govt has repeatedly said that it is looking at food prices, says Raghuram Rajan

RBI Governor Raghuram Rajan today said the government and the central bank need to be more vigilant about the food price situation against the backdrop of unseasonal rains damaging some crops.

"We have to be more careful in food management and government has repeatedly said that it is looking at food prices... It needs greater vigilance," he told reporters here.

Unseasonal rains and hailstorms since the beginning of the month have damaged rabi (winter) crops in northern and central parts of India.

Damage to food crops might stoke inflation, which has been on a downward spiral.

Finance Minister Arun Jaitley had earlier said that the consequential effects of the crop damage would be there.

"... It could impact on inflation. It could impact on certain (food) shortages... But then since we have surplus as far as the foodgrains are concerned, we can cope ... With the issue of shortage comfortably," he had said.

The wholesale price based inflation was in negative territory for the fourth consecutive month and fell to (-)2.06 per cent in February.

The retail inflation, however, rose to 5.37 per cent in February on higher prices of food items, from 5.19 per cent in the previous month.

India's foodgrains production is estimated to decline by 3.2 per cent at 257.07 million tonnes in the 2014-15 crop year (July-June) as against 265.57 million tonnes in the previous year, as per official data.