PMEAC raises inflation forecast to 6%

The recent increase in food prices has prompted the Prime Minister's Economic Advisory Panel to revise its projections for overall inflation at the end of the 2010-11 financial year upward to six per cent, as against the earlier estimate of 5.5 per cent.

"I think the more recent numbers indicate a pressure on food prices... My estimate now is that perhaps by March 2011, the wholesale price index inflation would be around 6 per cent," the Council’s chairman, C Rangarajan said.

He said overall monthly inflation was likely to be around seven per cent in December, mainly due to high prices of essential commodities. "We had earlier expected that price rise would be around 6.5 per cent by the end of December. But that appears to be unlikely,” he said.

Food inflation surged to a 10-week high of 14.44 per cent for the week ended December 18, as prices of vegetables — onions, in particular — besides fruits, cereals and protein-based products, continued to escalate.