FM links food products price rise to high demand, MSP

Finance Minister Pranab Mukherjee today attributed the rise in prices of certain food products like tea and sugar to lower production, high demand and increasing minimum support prices.

"Despite fall in overall inflation, for some of the food products and items of daily use like tea and sugar, it continues to remain high on account of lower production, increase in the minimum support prices and growth in demand," Mukherjee told the Rajya Sabha in a written reply.

Prices of certain food prices have continued to soar despite inflation entering negative territory in June. As per the latest figures, inflation was -1.17 for the week ended July 11.

Mukherjee, however, refused to link the sub-zero inflation to contraction of money supply saying "no one-to-one link can be ascribed to the inflation measured by WPI and changes in money stock and currency".

The minister said the overall monthly average wholesale price index-based inflation, which was 4.9 per cent in January, declined to 1.3 per cent in April before entering the negative zone next month.

The government is monitoring the price situation regularly, Mukherjee said, adding it has taken a slew of measures to check rising prices.

These include selective ban on exports and futures trading in food grains, eliminating import duty on select items and permitting imports of pulses and sugar by PSUs.

Earlier, Minister of State for Finance Namo Narain Meena had informed Parliament that the rate of price rise in essential commodities was as high as 10.85 per cent.

Retail prices of loose tea skyrocketed by 147.74 per cent in July, while the wholesale prices zoomed up by 141.3 per cent, Meena had said.