Ignore food, or not?

"India's retail inflation eased to a six-year low of 3.16% in April from 3.34% in March, driven by a further moderation in food prices." "Food inflation, which accounts for nearly half of the Consumer Prime Index (CPI) basket, slowed to 1.78% in April, compared to 2.69% in March." Hence, the Reserve Bank of India (RBI) "has more room to cut interest rates to support a slowing economy." ET.  Lots of powerful people in India claim that food prices depend on supply which cannot be controlled by higher policy rates, and so, should be ignored by the RBI. "Taming food prices, which have been driving headline inflation rate, through interest rates has a limited impact, said two external members of the RBI's Monetary Policy Committee in the December (2024) policy review." BS. In November 2024, "Finance Minister Nirmala Sitharaman has called for more discussion on using interest rates to control food prices," while "Commerce and Industry Minister Piyush Goyal said targeting food prices through interest rates was an 'absolutely flawed theory'." TOI. Even "Chief economic advisor (no less) V Anantha Nageswaran said that removing tomato, onion, potato, gold and silver from the calculation reveals a headline inflation CPI rate of just 4.2%." Surely, now they should look through lower food prices and leave policy rates alone as the RBI has already cut it twice by 25 basis points (bps) each time, from 6.5% to 6% in 2025 (ET). A first-of-its-kind Forward Looking Survey on Private Capex Investment Intentions by the government "projects intended private capex at almost Rs 4.9 trillion this fiscal year, about a quarter less than last year's plan." Mint. Companies will not add new capacity unless demand keeps rising and consumer demand cannot rise if higher prices eat into their earnings. In January 2025, "The much-awaited boom of consumer spending has not materialized, with demand remaining subdued." Because, according to the RBI data, "financial liabilities of households - borrowings - stood at Rs 77 trillion in June 2024." "As of March 2024, this had risen 56% to Rs 120 trillion." Mint. The Indian middle class "day by day is finding itself trapped in a vicious cycle of debt." "As per a recent survey by a fintech platform, Saral Credit, about 67% of Indian families have availed of personal loans. About 53% of Indian youth have taken personal loans before reaching the age of 30 years. In addition, during the decade 2014-2024, its share of bank credit has increased from 16.9% to 32.4%." BW. CEO of Marcellus Investment Managers Saurabh Mukherjea "flagged a troubling reality - millions of middle-class Indians have taken on multiple loans they may never be able to repay." BT. "The government has raised concerns over a growing trend of households shifting their savings from traditional bank deposits to market-linked financial products such as equities and mutual funds in search of higher returns." CNBC. If the RBI cuts policy rates, banks will cut the rate of interest on savings and more people may shift their money from bank deposits to the markets. If stock markets fall, millions of people could default on their debts leading to a surge in bad loans at banks. So now what? Ignore falling food prices? Or cut rates?