The RBI is facing up to structural inflation

Overview

Food prices in India remain relatively high despite a good harvest, particularly when an already elevated statistical base is taken into account. This reaffirms our view that a broader structural change on the demand side of the economy without any meaningful supply response to cater to the increased consumption is underpinning the inflationary bias. The trends in food inflation are reflective of the broader Indian economy, where growth shows few signs of slowing despite several policy...