Food inflation comfortable by March: Montek

Even as people grapple with sky high onion prices and rising petrol costs, the Plan panel today said that general as well as food inflation rate will be at comfortable level by the end of the current fiscal.

"The good news (is) that inflation is coming down. It is not to the level that we would be comfortable with... By the end of March, inflation rate and food inflation rate will be in comfortable level," said Planning Commission Deputy Chairman Montek Singh Ahluwalia on the sidelines of an ADB event here.

Overall inflation, also know as core inflation, declined to 7.48 per cent in November from 8.58 per cent in the previous month.

However, food inflation rose to 9.46 per cent for the week ended December 4, compared to 8.69 per cent in the previous week.

In the past few weeks, there has been a spike in vegetable prices -- most prominently of onion, which touched as high as Rs 80 per kg in retail markets in Delhi and other cities from Rs 35-40 a few days ago.

Meanwhile, speaking on impact of the petrol price hike on general inflation, Finance Secretary Ashok Chawla said, "not immediately there is always a lag."

Oil marketing companies including Indian Oil Corporation and Bharat Petroleum Corporation (BPCL) hiked petrol prices by about Rs 2.95 a litre last week.

BPCL, the second-largest fuel retailer in the country, took the lead to raise petrol prices by Rs 2.95 a litre to Rs 55.86 per litre in Delhi.

The Reserve Bank of India (RBI) has projected wholesale price inflation to fall to 5.5 per cent by the end of March 2011.

"Though inflation has moderated, inflationary pressures persist both from domestic demand and higher global commodity prices," the RBI said in mid-quarterly review last week.

It said the pace of decline in food price inflation has been slower than expected due largely to structural factors. There is a risk that rising international commodity prices will spill over into domestic inflation.

Going forward, rising domestic input costs for the manufacturing sector combined with aggregate demand pressures could weigh on domestic inflation, it said.