Lower agriculture input costs to contain food inflation

The government’s annual budget for fiscal year 2019 provides for support prices for agricultural produce to be increased to 50% mark-up over costs. That’s made the Reserve Bank of India and other market participants wary about the risks to food inflation. Bloomberg Economics’ agriculture input cost index shows that these concerns might be overdone.

• The latest value for the month of April shows that agriculture input cost inflation was a negative -0.25%, marginally higher than -0.71% in March. Click here for details on Bloomberg Economics agriculture input cost index.

• The average agriculture input cost inflation over the past year has been -1.4%. This has helped bring down food inflation. Food inflation that has a 46% weight in the CPI basket averaged 2.4% over the last year