Reserve Bank of India released the minutes of the Monetary Policy committee meeting December 3 to 5, 2019. According to the minutes, the RBI Governor Shaktikanta Das noted that headline inflation rose sharply in September and further in October, driven up by a sudden spike in prices of vegetables as kharif crop was damaged due to unseasonal rains in many parts of the country; increase in prices of onion was particularly sharp. Prices of certain non-vegetable foods items such as pulses, cereals, fruits and sugar increased at a faster pace than in previous two years. On the whole, food group inflation was at a 39-month high in October.
He stated further that the surge in food inflation in last three months, driven up by a spike in onion and other vegetable prices, could be transitory. It is likely to reverse gradually as late kharif output comes to the market. In view of this, even as current food price spike driven by vegetables can be looked through, there is a need for greater clarity as to how the overall food inflation path is going to evolve, as there is some uncertainty about the outlook of prices of certain non-vegetable food items such as cereals, pulses, milk and sugar.