The Reserve Bank of India (RBI) on Monday said the sharp decline in food inflation was due to a seasonal fall in vegetable prices and a high base effect and hence, may be short-lived.
“But for the seasonal sharp decline in vegetables prices, food inflation would have remained sticky, as inflation in protein-rich items continued to be in double digits,” RBI said in the macroeconomic monetary developments report.
The central bank said structural sources of food price pressures continued to persist. Changing dietary patterns, coupled with rising incomes and significant upward revisions in minimum support prices, is expected to keep food inflation pressures high, RBI said in the report.
Primary food articles inflation declined by 4.6 per cent since the double-digit increase recorded in October. Food inflation declined through 10 consecutive weeks to a 13-year low of -3.4 per cent as on December 24. Driven by a fall in food inflation, the overall wholesale price index declined to 7.47 per cent in December from 9.1 per cent a month ago.
Starting January, RBI expects the base effects to wane and primary food inflation to firm up once the seasonal moderation ends.
