Government may unveil action plan on spices soon to tame food inflation

The government is considering stricter rules for the trade of spices in the country, in a bid to address a persistent surge in the prices of such commodities along with other food items that are hurting the consumer, sources told Zee Business. Two government departments are preparing a report on the elevated prices and an action plan is expected shortly, they said.

An Inter-Ministerial Committee (IMC) has conducted three sessions of talks on the matter, and a decision from the Ministry of Consumer Affairs is likely soon, according to the sources. The report may also be sent to the Ministry of Finance. 

What kind of action is possible?

The government’s action plan may include revision in duty rates, and measures to counter illegal stocking, besides discussions with manufacturers and other stakeholders over the spike in rates, according to the sources. 

The prices of food items such as vegetables and spices have seen wild swings over the past few months, hurting the consumer, amid an increase in domestic demand amid tightening supply owing to unseasonal weather conditions. 

Zee Business was the first to report the surge in the rates of spices in the country. 

Food inflation: What to make of the latest reading

An official reading this week on food inflation in the country stood at 9.94 per cent in August, as against 11.51 per cent the previous month. Food inflation accounts for nearly half of the country's overall basket tracking consumer prices. 

Meanwhile, overall domestic consumer inflation eased somewhat to 6.83 per cent last month, cooling off from a 15-month peak, though still above the RBI's target range. 

Many economists believe that upward pressure on inflation persists in food items such as vegetables, spices, cereals, pulses and milk, and the impact of untimely rainfall on key crops remains important to watch as the country heads into a late festive season.