Decline in Core Inflation vs Sticky Food Inflation

  • Recently, the RBI Monetary Policy Report highlighted a significant divergence, with core inflation falling below 3.5% while food inflation remained sticky above 7%.
  • Core inflation excludes volatile food and fuel components to reflect the underlying demand in the economy.
  • Headline inflation includes the entire Consumer Price Index basket and is heavily influenced by food price shocks.
  • Sticky food inflation in 2025 was primarily driven by erratic monsoon patterns and supply-side logistical bottlenecks.
  • A decline in core inflation suggests that cumulative monetary policy actions have successfully moderated aggregate demand.

Policy Implications and Challenges

  • Persistent food inflation risks "unanchoring" inflation expectations, making it difficult for the ....
Do You Want to Read More?
Subscribe Now
To get access to detailed content

Already a Member? Login here

Take Annual Subscription and get the following Advantage
The annual members of the Civil Services Chronicle can read the monthly content of the magazine as well as the Chronicle magazine archives.
Readers can study all the material since 2018 of the Civil Services Chronicle monthly issue in the form of Chronicle magazine archives.
Be an Annual Subscriber

Current Affairs