BHUBANESHWAR, India, Feb 26 - Food inflation in
India is largely driven by supply side pressures and the central
bank is not responsible for that, India's central bank governor
said on Saturday.
Indian food inflation is among the highest in Asia despite
good harvests and food prices have been in double digits for
much of the last year, sparking street protests and keeping
pressure on the government
The food price index rose 11.49 percent and the fuel price
index climbed 12.14 percent in the year to Feb. 12, government
data on Thursday showed.
"Food inflation is because of the supply side and RBI
(Reserve Bank of India) is not responsible for that. You have to
have a supply side response," Duvvuri Subbarao said.
The wholesale price index , the most widely
watched gauge of prices in India, rose 8.23 percent in January
from a year earlier, compared with 8.43 percent in December.
To fight inflation which continues to be stubbornly high in
India, the Reserve Bank has already raised rates seven times in
the last one year and is expected to raise rates again in March.
"Monetary policy becomes the first line of defence for
inflation process... People think that inflation is going to be
high and that becomes a self fulfilling prophecy. To break that
inflationary psyche the Reserve Bank has to act and that is why
we have been acting since last one year," Subbarao said.
India is largely driven by supply side pressures and the central
bank is not responsible for that, India's central bank governor
said on Saturday.
Indian food inflation is among the highest in Asia despite
good harvests and food prices have been in double digits for
much of the last year, sparking street protests and keeping
pressure on the government
The food price index rose 11.49 percent and the fuel price
index climbed 12.14 percent in the year to Feb. 12, government
data on Thursday showed.
"Food inflation is because of the supply side and RBI
(Reserve Bank of India) is not responsible for that. You have to
have a supply side response," Duvvuri Subbarao said.
The wholesale price index , the most widely
watched gauge of prices in India, rose 8.23 percent in January
from a year earlier, compared with 8.43 percent in December.
To fight inflation which continues to be stubbornly high in
India, the Reserve Bank has already raised rates seven times in
the last one year and is expected to raise rates again in March.
"Monetary policy becomes the first line of defence for
inflation process... People think that inflation is going to be
high and that becomes a self fulfilling prophecy. To break that
inflationary psyche the Reserve Bank has to act and that is why
we have been acting since last one year," Subbarao said.
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