Finance minister Nirmala Sitharaman on August 10 distanced the government from the Economic Survey’s idea of excluding food from inflation targeting.

“The survey is free to pitch ideas,” the finance minister said reacting on queries regarding the use of core inflation as a target for monetary policy review.

The finance minister was addressing a post-Budget conference along with the Reserve Bank of India governor Shaktikanta Das.

The comments come just days after RBI governor stressed on the importance of food inflation as a target given that household inflation expectations are anchored with food.

“With the high share of food in the consumption basket, food inflation pressures cannot be ignored,” the governor had stated in his address post the monetary policy committee decisions.

The MPC, on August 8, had kept policy rate unchanged at 6.5 percent for the ninth consecutive time highlighting the need to bring inflation back to RBI’s 4 percent target.

Inflation had risen to 5.1 percent after a hiatus of three months as food inflation had galloped to 9.4 percent.

The MPC in its guidance had increased the second quarter forecast for inflation to 4.4 percent from 3.8 percent projected inflation. Full year inflation forecast was kept unchanged at 4.5 percent.

Experts indicate that inflation will likely surprise on the downside for second quarter.

An MC poll of 16 economists had pegged inflation for July at 3.6 percent given a favourable base, even as economists note that food prices are expected to remain high. Inflation was a high 7.4 percent in July last year.

The Economic Survey, released on July 22, had made the case for core inflation targeting given volatility in food prices. Food inflation has an over 45 percent weight in the inflation basket, at present.

The new Household Consumption Expenditure Survey had noted that household spending on food had declined below 40 percent for both urban and rural areas in 2022-23.