Centre says steps to combat food prices on the anvil

 The high inflation rate is not due to (statistical technicality called) base effect and is real, the Finance Minister said.

“We are looking into it. So far as onion is concerned, we have taken care of it... but the fluctuation in milk, fruit, vegetables and certain commodities have contributed to the inflation,” Mukherjee said.

The extent of price rise could be gauged from the fact that food inflation rose to 14.44 per cent on a high increase of 21.29 per cent a year ago.

High inflation rate last year generally makes inflation rate this year look small, other things remaining the same.

“This is an area of concern... earlier we thought that it is because of the base effect but it is not merely the base effect. There has been real increase in the prices of certain food items,” he said. Mukherjee projected the overall inflation for the current financial year to be around 6.5 per cent. “I am still holding that (financial) year-end inflation may be around 6.5 per cent,” he said. Mukherjee’s estimates of year-end inflation, however, is higher than  5.5 per cent indicated by Prime Minister Manmohan Singh and 6 per cent projected by the Mid-Year Analysis of the Finance Ministry for the current fiscal.