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| RBI says food inflation spreading to general economy |
| Press Trust of India / Mumbai Mar 11, 2010, 16:58 IST |
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The Reserve Bank (RBI) today said that high inflation, primarily driven by food prices, has started spreading to the broader economy but it is likely to ease on the back of an expected moderation in food prices.
"Inflation is now broad-based and spreading to areas other than food, especially manufacturing, and is not just restricted to food inflation," RBI Deputy Governor, Subir Gokarn, told reporters here.
Food inflation eased a bit to 17.81 per cent during the last week of February, but may not soothe overall inflation as petrol and diesel prices have risen sharply following the hike in duty rates.
The wholesale price index (WPI) inflation rose to 8.56 per cent in January, breaching the Reserve Bank of India's end-March projection of 8.5 per cent.
On a positive note, Gokarn said that food price-inflation is likely to ease moving ahead on the back of an expected good Rabi crop, although certain commodity prices may stay high.
"We are in the early part of rabi harvest and there is a growing confidence that the harvest is reasonably good, although there will be pressure on specific commodities-- overall we should see some moderation in food prices," Gokarn said.
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