<p>Inflation has refused to relent and stayed above 9 per cent for most part of the year. <br />A background note by the Finance Ministry circulated ahead of the Economic Editor’s Conference on Monday, said, “The fundamentals of the economy are strong and medium-term growth potential is around 9 per cent.”<br /><br />It, however, said that maintaining growth momentum along and price stability remains the biggest policy challenge that India is facing in the recent times. “The headline inflation will be under pressure till December 2011 and start to moderate after the festive season,” the note said. <br /><br />Prices of food and non-food items remained high for a major part of the year prompting the headline inflation to soar above 9 per cent for the tenth consecutive month in September. <br />Increase in administered petroleum prices in June, a significant increase in minimum support prices for some farm commodities, particularly rice and pulses, rise in non-food manufacturing inflation and depreciation of rupee vis-a-vis US dollar contributed to rising inflation.<br /><br />The note, however, was optimistic of food inflation moderating further when the kharif crop hits the market. Food inflation dropped from a peak of 22 per cent in December 2010 to around 9 per cent recently. However, price pressure on perishable items, particularly in fruits, onions, potatoes, meat, milk, eggs and fish continue due to supply mismatch with the rising demand of such items.<br /></p>
<p>Inflation has refused to relent and stayed above 9 per cent for most part of the year. <br />A background note by the Finance Ministry circulated ahead of the Economic Editor’s Conference on Monday, said, “The fundamentals of the economy are strong and medium-term growth potential is around 9 per cent.”<br /><br />It, however, said that maintaining growth momentum along and price stability remains the biggest policy challenge that India is facing in the recent times. “The headline inflation will be under pressure till December 2011 and start to moderate after the festive season,” the note said. <br /><br />Prices of food and non-food items remained high for a major part of the year prompting the headline inflation to soar above 9 per cent for the tenth consecutive month in September. <br />Increase in administered petroleum prices in June, a significant increase in minimum support prices for some farm commodities, particularly rice and pulses, rise in non-food manufacturing inflation and depreciation of rupee vis-a-vis US dollar contributed to rising inflation.<br /><br />The note, however, was optimistic of food inflation moderating further when the kharif crop hits the market. Food inflation dropped from a peak of 22 per cent in December 2010 to around 9 per cent recently. However, price pressure on perishable items, particularly in fruits, onions, potatoes, meat, milk, eggs and fish continue due to supply mismatch with the rising demand of such items.<br /></p>
