Context-

• According to Consumer Price Index (CPI) estimates, Retail inflation declined to 6.8 percent in August as compared to July (7.4 percent).
• Even food inflation declined from a high of 11.5 per cent in July to 9.94 per cent in August. Still it is more.
• This decline is mainly due to decline in vegetable prices, which were 26.1 percent in August compared to 37.4 percent in July. However, inflation in cereals and pulses remains in double digits.

​RBI's opinion -

• The Reserve Bank of India has also admitted in its monthly bulletin that food inflation is proving difficult to control.

 Government's opinion-

• According to Finance Minister Nirmala Sitharaman, economic development may have to pay the price of controlling inflation by increasing interest rates.

Reasons for increase in inflation in food items -

• Due to shortage in domestic supply, inflation in many food items, especially grains and pulses, has increased.
• Wheat production was affected due to heat and unseasonal rains.
• At the same time, low and uneven rainfall is responsible for the high prices of rice.

 Reasons for increase in inflation in food items -

• Due to shortage in domestic supply, inflation in many food items, especially grains and pulses, has increased.
• Wheat production was affected due to heat and unseasonal rains.
• At the same time, low and uneven rainfall is responsible for the high prices of rice.

 Steps taken by the government -

• Wheat export banned in May, 2022.
• Apart from this, after the ban on export of common variety rice, minimum export prices were fixed for Basmati rice.

 Measures to deal with food inflation-

• To encourage production,
• Development of storage facilities,
• Diversifying crops,
• Promotion of climate smart farming etc.

Exam oriented Static facts

CPI 

• An index measuring the average price of goods and services purchased by domestic consumers.
• Base year-2012