Inflation risks

Supply-side issues will complicate policy choices

The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), which is currently reviewing the policy and will announce its decision on Friday, is likely to have discovered that some of the drivers of inflation are changing. While prices of vegetables, particularly tomatoes, have come down, those of other food items are firming up. Meanwhile, crude oil prices have also witnessed a sharp increase  since the last policy meeting and are expected to remain elevated. Although the increase in crude oil prices may not push up the inflation rate immediately because oil-marketing companies have stopped adjusting to