High Consumer Price Index causes retail inflation: Govt

A higher weight of food items in the consumer price index has kept retail inflation at elevated levels in the country, according to official data.

The high inflation in India owes to “higher weight for the food basket (about 50 per cent)” as against 14 per cent and 32 per cent weights for Korea and China, respectively. The consumer price index-based inflation remained elevated at 9.5 per cent in 2013 and 10.2 per cent in 2012.

In 2013, CPI inflation or retail inflation in China stood at 2.6 per cent, Korea 1.3 per cent, Sri Lanka 6.9 per cent, Indonesia 6.4 per cent, Malaysia 2.1 per cent and Thailand 2.2 per cent.

In 2012, the respective inflation in these countries were 2.6 per cent (China), 2.2 per cent (Korea), 7.5 per cent (Sri Lanka), 4 per cent (Indonesia), 1.7 per cent (Malaysia) and 3 per cent (Thailand).
“Government is closely monitoring the situation and taking measures on an ongoing basis to bring down inflation,” an official said.

The difference in inflation in Asian countries may be on account of several factors such as composition, base, weights of respective CPI basket, structure of the economy, resource endowments and distribution of income, he added.

To bring down inflation, government has made several announcements in Budget 2014-15 including technology driven second green revolution with focus on higher productivity and protein revolution.
Apart from these, a price stabilisation fund has been proposed to mitigate risk of price volatility in agriculture produce.

The Budget has also announced to allocate Rs 50 crore each for developing an indigenous cattle breed and initiate a blue revolution in inland fisheries.

India’s CPI inflation in June 2014 dipped to a 30-month low of 7.31 per cent mainly on fall in prices of food items, including cereals, meat and vegetables. It was 8.28 per cent in May.
Food inflation fell to 7.97 per cent in June against 9.56 per cent in May.