Worried about inflation? Look beyond food, at core Onion prices skyrocket every year, buffer stock policy needs a review

The Economic Survey released on Friday pitched for shifting the focus from consumer price-based inflation (CPI) to core inflation.

It also called for revision of CPI's base year.

The survey said the sole focus on CPI-Combined (CPI-C) inflation may not be appropriate as food inflation -- which contributes significantly to CPI-C -is driven primarily by supplyside factors.

Given its role as the headline target for monetary policy, changes in CPI-C anchor inflation expectations.

Besides, several components of food inflation are transitory with wide variations within the food and beverages group.

Food inflation has been driving overall CPI-C inflation due to the relatively higher weight of food items in the index, said the survey.

MUMBAI: Expressing concern over a sharp rise in onion prices during August-November every year, the Economic Survey recommended review of the government's buffer stock policy, adding that the key kitchen item should be stored in modern cold storage facilities and distributed timely to reduce wastage of huge quantities.

The pre-Budget Survey also said the government should promote the use of dehydrated onions that have longer shelf life for buffer stock purpose, while the hydrated variety should be sold early.