KOCHI: Consumer Price Index based inflation eased to 5.1 percent in February. Although inflation has decreased compared to the same period last year, the threat of price hikes remains strong. Inflation was 5.69 percent in January. A major challenge is the decline in food production due to climate change. The food price index rose by 8.66 percent in February.

The possibility of a reduction in interest rates on loans before September has dimmed as the threat of inflation intensified. The Reserve Bank is of the view that the rise in food prices is not fully under control and that interest rates should not be reduced in a hurry. The Reserve Bank had hiked the key repo rate by 2.5 percent after May 2022 as inflation rose to double digits. With this, the decrease in money supply in the market moderated the price rise.

Due to the sharp drop in production, wheat stocks in government warehouses have come down to 97 lakh metric tonnes. This is the lowest collection in seven years. The humiliation was caused by the central government selling large quantities of wheat in the market to maintain domestic prices. As of March 2022, 1.17 crore metric tonnes of wheat were in warehouses.