Food inflation at 8.53% FM for global action on price rise

Snapping a fortnight-long rise, food inflation fell to 8.53 per cent in the week ended April 23 as pulse prices eased, even as Finance Minister Pranab Mukherjee called for global efforts to reign in volatility in prices.

Food inflation was 8.76 per cent in the previous week. However, the rate of price rise of food items is much lower now than the 20.91 per cent reported in the corresponding week of last year. Experts, however, said global commodity prices, mainly of crude oil, would have further impact on the country’s overall inflation and that the Reserve Bank was likely to hike its interest rates further.

Speaking at the Asian Development Bank’s annual meeting in Hanoi, Mukherjee said the recent volatility in international prices of food and fuel had thrown up fresh challenges in management of inflation and could well turn out to be a long-term global problem.

“...Management of inflation, in addition to domestic efforts, will increasingly have to be a globally coordinated effort,” he said. “Inflation, particularly, the increase in food prices is a major concern for India as well as other developing countries. We are trying to reduce it to supply and demand side management.

“We are looking at easing of the price situation in India with adequate buffer stock and hopefully a good monsoon,” Mukherjee told reporters in the Vietnamese capital.

An inter-ministerial group headed by Chief Economic Advisor Kaushik Basu would hold a meeting here tomorrow to review the price situation in the country. During the week under review, wholesale prices of pulses declined by 7.39 per cent on a year-on-year basis. However, all other commodities witnessed a rise.

Basu said while inflation remained at “unacceptably high” level and was expected to moderate. “I am expecting it will dip down a bit,” he said.

He said inflation for April would be “definitely below nine per cent”, a line which was in variance with RBI’s average projection. In its monetary policy, which was mainly focused on inflation control, the RBI projected overall inflation to fall to around 6 per cent by March 2012.

However, the central bank had said high global commodity prices would keep inflation at a higher level of around 9 per cent in the first half of the financial year.

Headline inflation had been above 8 per cent since January 2010. It stood at 8.98 per cent in March this year.