Centre says food inflation will taper

Decline will be in the range of 5-6 per cent
Last Updated 05 July 2010, 16:42 IST

“Food inflation is going down. It will take some time before it really comes into a range which is acceptable to the government and which is good for the people,” Finance Secretary Ashok Chawla told reporters on the sidelines of a conference on state highways here.

Food inflation declined by almost 4 percentage points to 12.92 per cent for the week ended June 19. Several analysts attributed the decline to the base effect, rather than any real decline in prices.

Wholesale price-based inflation, which includes variation in food prices, crossed double digits (10.16 per cent provisionally) in May, but as per final figures, the rate of price rise has been 11 per cent or more since February.

When asked what would be an acceptable range of food inflation, he said it would be 5-6 per cent.

Different take

While the government feels that the food inflation would come down, analysts said the overall inflation would increase in the coming days due to the steep hike in fuel prices.
The government had last month deregulated petrol prices, leading to a Rs 3.5 a litre hike, while diesel rates were raised by Rs 2 a litre, LPG by Rs 35 a cylinder and kerosene by Rs 3 a litre.

Meanwhile, the Reserve Bank of India, on Sunday, said managing inflation will remain its main priority. “For RBI, inflation is everything... for the (finance) ministry, it is growth. But in the long run, both will converge...inflation is the biggest enemy,” RBI Deputy Governor K C Chakrabarty had said.

Short-term rates

While raising the short-term rates, the RBI had said “The developments on the inflation front, however, raise several concerns... Food price inflation and consumer price inflation remain at elevated levels. There has been some moderation in food price inflation, but the price index of food articles continues to increase.”

(Published 05 July 2010, 16:42 IST)

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