The spike in inflation, which will be painful for the poor, is a result of the climate crisis, making it difficult to control through monetary policy.
A vegetable price shock has sent India’s benchmark inflation rate to a 15-month high of 7.4% in July. The jump in headline inflation came despite a moderation in core inflation, which measures the non-food non-fuel part of the Consumer Price Index (CPI) basket, says a Hindustan Times editorial.
What does one make of the latest numbers? Three key takeaways; short-, medium- and long-term can be listed.
Vegetable prices should cool down in a month or two and so will the associated tailwinds to headline inflation. In other words, there is no reason to panic.
However, prices of other key food items, such as cereals and pulses, continue to rise at an uncomfortable pace. This means that the goal of bringing CPI close to the Reserve Bank of India’s target of 4% will not materialize anytime soon.
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