Food inflation may transmit to non-food items: FM

Finance Minister Pranab Mukherjee today said food inflation might spread to non-food items over a period, although food prices had started coming down. “Though the food prices have started coming down, the concerted pressure of headline inflation arising from high food prices entails the risk of getting transmitted over time to other non-food items,” Mukherjee said at the inaugural ceremony of Exim bank branch here.

Meanwhile, Chief Economic Advisor Kaushik Basu said in Mumbai that inflation had slowly spread to non-food items from food items. He said, however, that it would begin to decline now and would be quite lower from May-end. “Inflation has picked up a little bit on non-food sectors, which was not the case earlier... We expect to see it going downward from March and (it will be) very low by end-May or June,” he said.

Food inflation declined from 17.81 per cent in the last week of February, but still stood at high level of 16.3 per cent in the first week of March.

It has slowly spread to non-food items and analysts say that the Reserve Bank of India recently raised its key short-term rates by 25 basis points each to prevent this spillover.

Overall, inflation rose to 9.89 per cent in February from 8.56 per cent in January.