Food inflation has been a headache for governments since 2010...

Every year, floods, limited irrigation resources, bad food distribution and procurement policies, and missing storage facilities threaten financial stability, leading to higher wage demand and higher price and interest rate expectations... Food inflation is the main cause of inflation expectations in the economy... People say higher interest rates would not control inflation, though higher unemployment might reduce demand and inflation expectations...

Interest rate controls unemployment and demand, therefore it is wrong to say that it would not control food inflation... Lower interest rates and higher employment would increase demand for food and vice versa... Nonetheless, food and fuel inflation directly adds to prices and wage demand, though inflation expectations are also self-fulfilling through a wage-price spiral... We need to break this because inflation means a loss in competitiveness, demand, and growth... Inflation and expectations reduce demand - people spend less and also save more for the future- though low prices and expectations increase spending and also reduce future savings... Inflation lowers spending and lower prices increase spending... A loss in the value of money lowers spending and savings, and a higher interest rate is compensation, inflation also lowers exports...

Food inflation and high imports, especially edible oil and pulses tell the real story... INDIA has a deficit in food supply and pledges to be a food surplus country by 2047... False comments could not sway people who read and access the internet... It is more important to make people conscious and aware of the facts... it is the duty of a citizen... We are in an age which could spell trouble for liars, though the information could be changed too by people in power, it is a personal experience... If you raise you voice against those your survival would be in question...

India's food inflation is seasonal; it happens every year. The government of India demands too much for its public distribution, which increases the cost of supply and storage problems, which should actually be done through DBT."

After Covid all countries experienced inflation, but food inflation continued to remain high in INDIA even after years... All countries including China and the US controlled food inflation...

INDIA's inflation is not on a glide path it is sticky at 5% and given the 6.5% policy rate, the real rate is 1.5% which does not make room for big rate cuts... INDIA's supply side is not up to mark therefore we cannot assume that lower borrowing costs would increase supply and disinflation expectations which would increase demand and inflation expectations and could further increase inflation...

What an idea if inflation is high due to food inflation, reduce food weightage in the CPI... excellent to drive monetary policy with an agenda, and reduce interest rates when inflation is still 5%... If income is increasing 10% a year, 5% of inflation would be would be like a 50% tax... The inflation target should be 2%... Higher interest income is just for higher inflation and could help reduce spending and inflation... If the RBI reduces interest rates, it is a different matter...

In August 2024, without the base effect, the situation becomes even worse, 3.54% is on the 5.08% base and if we replace the 5.08% base with the 0, the base effect would gone and the inflation would be 8%...Probably if we calculate inflation on the same base year as the last print inflation would be 8%... We see not inflation but rate of growth of inflation...

Inflation is low given the base effect as the base on which the inflation was calculated was higher than normal. However, if we calculate inflation on the same base year on which the second last month's inflation was calculated we get a higher inflation print that may be double what we get now... Food inflation and taxes on fuel are hurting the (real) wages and demand and productivity... When inflation is high the central bank must compensate through higher interest rates... There is no other way of protecting financial stability... and loss in demand...

When we have high inflation and interest rates, how the economy would behave? The media and some people think everything is hunky dory, election season is over let us face the reality now... Inflation and unemployment, the twin objectives of the economic policy are on board negative...

RBI often considers base period as potent justification for low or high future inflation or expectations... it just got it right this time that September inflation would be high when it explained the cause of too low inflation in August which generated higher inflation and interest rate expectations... which underlies the RBI's understanding of prices/inflation and expectations.. If RBI could rightly predict inflation, it could bring a lot of certainty to the business group investment decisions... and most importantly interest rate decisions and expectations... it directly adds to spending and growth, though information about prices affects everybody... when have money... profit from a price move or motive... We do not always want higher prices buyers need low prices and sellers need higher prices, but the actual outcome would be only in favor of one this time either buyers or sellers... Time chooses the winner between sellers or buyers... in the short run...