Key Points
Former RBI governor Raghuram Rajan has cautioned against the exclusion of food prices from inflation calculations..
If you leave out some of the most important parts of inflation and tell them inflation is under control, but food prices are going through the roof they would not have great faith in the Reserve Bank, Rajan said in an interview with PTI...
Chief Economic Advisor V. Anantha Nageswaran, in the Economic Survey 2023-24, had suggested excluding food inflation from benchmark interest rate considerations, citing limited control of monetary policy over volatile food prices...
Rajans concern is that disconnecting food inflation from official figures could lead to a situation where consumers, facing rising food prices, would lose confidence in the central banks statements about inflation being under control..
Despite this, Rajan and RBI Governor Shaktikanta Das have voiced concerns over sidelining food inflation, noting that it makes up a significant share of the CPI and influences public perception of inflation...
