Food is expensive. Cut it down.

"India's monetary policy framework should consider targeting inflation that excludes food, the prices of which are influenced more by supply than demand, the government's 2023-24 Economic Survey said." "Volatile vegetable prices have caused frequent inflation spikes in recent years." ET. In 2021, the government "asked the Reserve Bank (RBI) to maintain retail inflation at 4% with a margin of 2% on either side for another five-year period ending March 2026." ET. Problem for the RBI is that prices of food are dependent on supply, which is largely dependent on the weather, and tinkering with interest rates is not going to increase supplies. "India's framework of agricultural subsidies, for example, was designed in the 1960s to boost domestic grain production." "But it isn't right for an industrializing, food surplus nation that needs stable vegetable prices instead." "Core inflation - excluding food and fuel - has been well below the 4% rate for some time. But the central bank hasn't cut rates, because Indian food prices have been higher than global peers," wrote Mihir Sharma. "India's retail inflation eased to 3.54% on an annual basis in July, data released by the government showed." ET. But no one is celebrating because "it's the base effect, stupid!" "Retail inflation based on the Consumer Price Index (CPI) in July 2023 was 7.44%, a 15-month high at the time." "In fact,...the core inflation has gone up to 3.4% in July, as against analyst expectations of a 3.1% increase and from 3.1% in June." ET. "Although the main source of food price rises - supply shocks - is outside the ambit of monetary policy, a disinflationary policy is required to curb price pressures, RBI Deputy governor Michael Patra and others said in an article." "According to the article, if the disinflationary policy retreats, price pressures on core and headline inflation could get aggravated and 'run out of control'. This, it said, is a risk especially with aggregate demand picking up and a possibility of rising input costs on the back of geo-political tensions." Mint. In addition, "When food inflation is high for a prolonged period, wages go up, ultimately leading to higher prices. At this point, inflation becomes generalized, rather than being restricted to food. Unanchored inflation expectations also push up future inflation," wrote Deepa Vasudevan. A paper by think-tank National Council of Applied Research argues that targeting core inflation by ignoring food prices "is not feasible in a country like India, where food makes up nearly half of the consumer price basket." "Instead the authors suggest that reducing the weight of food in the consumer price basket is more suitable. They estimate that this weight could reduce to 30% within a decade due to projected increase in per capita incomes, from the current 45.8%. In the short term, they recommend cutting it to 40%." ET. Anticipating resistance to its idea of shifting to a core inflation target the Economic Survey recommended Indians should eat less. "India's achievement of its long-term goal to become a developed economy also hinges on its population losing weight, the Economic Survey 2023-24 has indicated." ET. If 1.453 billion Indians (worldometer) eat less, food prices will fall, bringing down retail inflation, enabling the RBI to reduce interest rates, helping businesses to expand by borrowing cheaply, increasing employment, which will increase demand, stimulating even more investment and, hey presto, India will become a developed country in no time. Absolutely brilliant. Ban fatties. Cut off food. Float up the rankings.