New Delhi, June 16 (IANS) India’s annual food inflation may rise over the next few weeks because of the base effect of last fiscal but fall eventually as the situation is within control, Planning Commission Deputy Chairman Montek Singh Ahluwalia said Wednesday.
‘It is quite possible when data comes out on Thursday, you may see a little increase in food inflation,’ Ahluwalia told reporters on the margins of a event on the Jawaharlal Nehru National Solar Mission.
‘That is because this time last year, food index had actually fallen and then it began to rise very sharply,’ he said, adding: ‘There is no reason to worry. As you see the weeks go by, food inflation would come down again.’
Finance Minister Pranab Mukherjee had expressed worry over rising food prices but said there was no cause for worry. ‘With the expectation of good monsoon and crop, I think moderating influence will be there from the middle of July onwards.’
Their remarks came against the backdrop of the official data on wholesale price index showing the country’s annual inflation rate for May at double digit at 10.16 percent in May from 9.59 percent in April, due mainly to higher food and fuel prices.
Data released by the commerce and industry ministry showed that prices of food articles rose 16.49 percent last month, against 16.87 percent in April, while that for fuels moved up 13.05 percent in the month under review.
Key policymakers admitted that inflation was getting broad-based, with a consensus emerging for the central bank to hike interest rates soon and not wait for the review of its monetary policy stance in July.
‘I think the picture is clear. Inflationary pressures are stronger,’ said C. Rangarajan, chairman of the Prime Minister’s Economic Advisory Council and a former governor of the central bank. ‘Some action will be called for by RBI in terms of policy tightening.’