Pranab hopes good monsoon will help ease inflation

I / Patna June 14, 2010, 19:56 IST

As inflation climbed to 10.16 per cent in May showing no signs of cooling, Finance Minister Pranab Mukherjee today said prices would begin to ease once it's clear monsoons are normal.

"After July, the trend of monsoon (will become)... Known. Inflationary pressure would start coming down," he told reporters here.

Wholesale Prices-based inflation provisionally touched a 19-month high of 10.16 per cent in May, while final figures released for the month of March put inflation at a much higher 11.04 per cent.

The India Meteorological Department expects monsoon, which accounts for 80 per cent of rains the country receives, to be near normal this year. Poor monsoon last year hit crop production, fueling rise in prices of food items.

"It (inflation) is a surely a matter of concern because food inflation is rising. Wholesale Price Index (WPI) has also crossed double digits. It will continue till middle of July", he told reporters after addressing the bankers' conference here.

The inflationary pressure, he added, would come down after the monsoon trend becomes clearly visible.

The government, Mukherjee pointed out, had taken a host of administrative measures in the past to increase availability of essential commodities, especially pulses and sugar.

The Reserve Bank too, he added, had increased the policy rates and ratios to mop up excess liquidity from the system to curb money supply as part of efforts to arrest inflation.