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| Prices unlikely to see steep drop in the near term, says Gokarn |
| BS Reporter / Mumbai May 17, 2011, 00:39 IST |
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Pointing to stickiness of high commodity prices, the Reserve Bank of India on Monday said prices would not come down sharply in the near term.
 “The pace of rise in food prices, which was 20 per cent few months ago, has softened to 10-15 per cent. Still, we can hardly gain comfort from it,” RBI Deputy Governor Subir Gokarn said, while addressing the India chapter of the International Chamber of Commerce.
Though cereals (wheat and rice) have been stable in the last two years, prices of milk, pulses, oil seeds, eggs, fish, meat, and fruit and vegetables had gone up substantially. The global crude oil prices have plateaued. However, they were likely to remain at the present level or go up, Gokarn said. In recent months, crude prices had touched $120 a barrel, reflecting concerns on political upheavals in West Asia and North Africa.
Commenting on the inflation data for April, the RBI deputy governor said the pattern of high inflation level was persistent. “It is not a pleasant thing to be proved right. But it (high wholesale price index inflation) is a reality,” he said.
Inflation decelerated slightly to 8.66 per cent in April from 9.04 per cent in the previous month but remained above the RBI’s comfort zone.
RBI, in its annual policy for 2011-12, had estimated wholesale price inflation at about six per cent by March 2012. Inflation is expected to stay at elevated level for two quarters.
Gokarn said the risk of commodity price inflation becoming generalised was now visible. Even though India’s economic growth rate is reassuring, the slowdown in investment activity is not desirable.
The rise in industrial production had been volatile, while investment had slowed down.
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