India’s Government Imposes Restrictions to Control Inflation

India’s new government on Tuesday imposed export restrictions on certain farm commodities and ordered a crackdown on hoarding to control rising food prices, a day after wholesale price inflation hit a five-month high.

A jump in prices of potatoes and onions last month drove inflation to 6.01 percent from 5.20 percent in April, contributing to a sell-off in financial markets.

Prime Minister Narendra Modi, who was elected last month amid widespread anger over rising prices, has made tackling inflation his top priority.

Forecasts of weak monsoon rains that irrigate much of India’s food production have added to inflation fears, and volatile vegetable prices have risen by double digits.

Finance Minister Arun Jaitley, who held a meeting on Tuesday to decide steps to control food inflation, said the government was keeping a close watch on the price movements of 22 commodities and would offload additional rice stocks in the market to prevent a build-up in inflationary expectations. The government is planning to release 5 million tonnes of rice from state stockpiles to curb inflation, Food Minister Ram Vilas Paswan told reporters.

“The government would be releasing additional rice stocks from government warehouses for supplies to the state governments,” Paswan told reporters.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza