Food prices to moderate after festive season: Pranab

 With food inflation falling to a single-digit for the week ended August 27, Finance Minister Pranab Mukherjee today expressed hope that it would moderate further after the end of the festive season, though high prices of non-food items continue to be an area of concern.

"During the festive season, there will be some fluctuation (in food prices). But after that, moderating influence will continue," Mukherjee told reporters here.

His comments came after food inflation slipped to 9.55% for the week ended August 27 from 10.05% in the previous week, data released by the government said.

"In agricultural prices, commodity prices and food items, there could be fluctuations and up and down during the festive season. Tomorrow is Onam. Therafter is Dusshera and Diwali," Mukherjee said.

He said, however, the price situation in the non-food and fuel segments is still not encouraging.

"Though food inflation has come down... (inflation of) other items has increased substantially, particularly the non-food primary articles, which is not at all encouraging," the Finance Minister said.

Inflation in non-food articles, which include fibres, oilseeds and minerals, stood at 19.88% during the week ended August 27, up from 17.19% in the previous week.

Meanwhile, fuel and power inflation stood at 12.55% for the week under review, the same as in the previous week.

"Fuel prices are still a cause of concern, hovering around USD 115 per barrel. I do hope it will be possible for us to have some moderation with the international economy's trend. But it is difficult to predict that right at this juncture," Mukherjee said.

Overall, inflation in primary articles was recorded at 13.34% for the week ended August 27, up from 12.93% in the previous week.

Mukherjee also said the government expects headline inflation to moderate by March, 2012.

"I hope before the end of the fiscal year, it would be possible to have a moderate rate of inflation," Mukherjee said, without giving any numbers.

Headline inflation, which factors in manufactured items, fuels and non-food primary items, besides food articles, stood at 9.22% in June. It has been above the 9%-mark since December last year.

The government had earlier said headline inflation is likely to remain high till the third quarter and then moderate to around 6.5% by March, 2012. The RBI has projected fiscal-end inflation at 7%.