Food inflation to fall to 5-6% in due course, says Chawla

On a day all the Opposition parties called a nationwide strike against fuel price rise, the government today said food inflation, which was on a decline, would be in an “acceptable” range of 5-6 per cent in due course.

“Food inflation is going down. It will take some time before it really comes into a range acceptable to the government and good for the people,” Finance Secretary Ashok Chawla told reporters on the sidelines of a conference on state highways here.

Food inflation declined by almost 4 percentage points to 12.92 per cent for the week ended June 19. Several analysts attributed the decline to the base effect rather than any real decline in prices.

Wholesale price-based inflation, which includes variation in food prices, entered double digits (10.16 per cent provisionally) in May, but, according to final figures, the rate of price rise had been 11 per cent or more since February.

When asked what would be an acceptable range of food inflation, he said it would be 5-6 per cent.

The finance secretary's statement came on the day when the Opposition had called a nationwide strike to protest the fuel price increase, which disrupted normal life in several parts of the country. Industry estimates said the economic loss ranged between Rs 3,000 crore and 10,000 crore.

While the government felt the food inflation would come down, analysts said the overall inflation would increase in the coming days due to the steep increase in fuel prices.

The government had last month deregulated petrol prices, leading to a Rs 3.5 a litre increase, while diesel rates were raised by Rs 2 a litre, LPG by Rs 35 a cylinder and kerosene by Rs 3 a litre.

Meanwhile, the Reserve Bank of India (RBI) yesterday said managing inflation would remain its main priority. “For RBI, inflation is everything.... For the (finance) ministry, it is growth. But in the long run, both will converge.... Inflation is the biggest enemy,” RBI Deputy Governor K C Chakrabarty had said.