Rising prices: Centre calls meet of state food ministers

 Concerned over the rising prices of pulses and some other food articles, the government has called a meeting of state food ministers on July 7 to discuss supply measures needed to check prices of essential commodities.

The government, making an effort to reboot economic growth, wants the Reserve Bank of India (RBI) to support it by cutting policy interest rates, but the RBI has maintained it will be difficult to oblige the government until inflation comes down.

Although inflation has come down according to official figures, in reality, there is hardly any relief to commoners from rising prices. Prices of pulses, particularly, have crossed the Rs 100 per kg mark, owing to decline in their production by nearly two million tonnes in the 2014-15 crop year (July-June).

The RBI has said it would wait longer to see the impact of monsoon on inflation even as initial rainfalls have been good.

The central bank has cut interest rates thrice since January this year but has cautioned that the next rate cut would depend on how quickly inflation comes down.

The RBI fears that retail inflation may go up again after the base effect wears off around August. The initial forecast of a sub-normal monsoon and volatile movement in crude prices may have an adverse impact on prices of essential commodities.  

“CPI-based inflation is expected to be pulled down by base effects till August and thereafter to increase to about six per cent by January 2016. However, the El-Nino phenomenon and a projected sub-normal monsoon may have a potential inflationary impact. Similarly, the trend in global crude oil prices amid considerable volatility and exchange rate movement could increase upside risks to inflation if capital flows moderate,” the Financial Stability Report of RBI.

“The government is concerned over the rising prices of pulses and some other food items. So, a meeting has been convened on July 7 of all state food ministers,” a senior government official said.