Unexpected spurt in food inflation numbers: Basu

Top advisor in the finance ministry today said that the spurt in food inflation was expected, but not to the extent of 18.32 per cent, recorded for the week ended December 25.

Chief economic advisor Kaushik Basu told reporters that movement of onions, whose price rise resulted in inflation climbing to 18.32 per cent, should be facilitated to bring down its cost.

Basu said he will emphasise on facilitating the onion movement at a meeting called by Cabinet Secretary K M Chandrasekhar to take stock of prices later today.

The week-based inflation number, which is the highest for 2010 so far, was spiked by the rising onion and vegetable prices. Food inflation for the preceding week was recorded at 14.44 per cent.

Basu cautioned against using any blunt instrument like arbitrary fixing of prices to tame the exceptionally high prices, as such a move results in shortage of commodities.

While vegetables became costlier by 58.58 per cent, onion prices rose by 82.47 per cent on an annual basis. On weekly basis, onion prices rose by 23.01 per cent in the wholesale market.

The finance ministry has already revised its overall inflation target to 6.5 per cent by the March end, from 6 per cent as projected in the mid-year analysis tabled in the Parliament last month.