What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.

Explains the supply-side drivers of food inflation and why repo rate changes alone have limited effect on them.

• A strong El Niño has hurt the monsoon and crops, raising food prices, which make up a large share of India's CPI; Nomura expects retail inflation to breach 6%.
• Note that interest rates cannot grow more food or pump more oil; they work mainly on demand.
• It recommends supply-side steps such as buffer stocks and import duty cuts, as with edible oils, alongside targeted fiscal support.

Use the decade review to argue that food inflation is largely supply-driven, so repo rate changes have limited power over it, while FIT has still lowered average inflation.

• Food inflation is driven by supply shocks such as food, fuel and monsoon disruptions, which interest rates cannot fix; tightening then costs output, and the Hindu analysis warns of stagflation risk.
• The Hindu analysis finds India's Phillips curve almost flat (April 2012 to March 2026 data) and household inflation expectations about 4 percentage points above RBI projections.
• Defenders note average inflation of about 4.9% since 2016 against 6.8% before FIT; the new CPI (base 2024) cuts food and beverages' weight to 36.75% from 45.86%.

Use it to show that part of food inflation is imported and supply-driven, which the government tackles with tariff tools rather than RBI interest rates.

• India imports about 57% of its edible oil needs; the FAO Vegetable Oil Price Index hit its highest level since June 2022 in August 2026, feeding domestic prices.
• From 24 September 2026 basic duty on crude soybean and palm oil was halved to 5% and crude sunflower oil cut to nil, ahead of the festival season.
• The Food Ministry asked edible oil associations to pass on the full benefit by revising distributor prices and MRPs, showing that transmission of relief is not automatic.