Publication

This paper analyses trends in inflation in India over the past five years, particularly food inflation, and examines the demand and supply side factors behind surging food prices. It argues that demand for several food items exceeds their current supplies, and leads to high prices. It further contends that this demand-supply imbalance is attributable to structural inefficiencies, including distribution of food products. Pointing out that monetary policy responses are unlikely to prove effective in reducing food prices, the paper emphasises on the importance of increasing agricultural productivity and reforming retail trade policies for long-term results.