Good monsoon will bring down inflation by Oct-end: PMEAC

On a day when food inflation again breached the 9% mark after a gap of two months, Prime Minister's top economic advisor C Rangarajan today said prices will decline by the end of October in the event of a good monsoon.

"If monsoon is favourable, food prices will come down over the next 2-3 months. Overall inflation rate will come down slowly by October-end", Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan told reporters here.

Rangarajan also exuded confidence that headline inflation would decline down to 6.5% by March 2012 and that monsoon would lead to a decline in prices from the current level of 8.66% (April).

"Once monsoon picture becomes clear, I expect decline in prices. We could see WPI (wholesale price inflation) at 6.5% by March-end," Rangarajan said.

Food inflation jumped to a two-month high of 9.01% for the week ended May 28 on account of costlier fruits, onions and protein-based items.

The PMEAC, which proposes to come out with its Economic Outlook for 2011-12 next month, today held detailed discussions with industry leaders during which the issue of inflation figured prominently.

The industry representatives also expressed concerns over high interest rate and its impact on economic growth.

The other issues that came up for discussion include land acquisition laws, slow growth in exports in certain sectors like textile, infrastructure bottlenecks and other impediments threatening the industrial growth.