At a time when the WPI-based inflation is hovering below 1 one per cent, the food inflation has surged to 16.32 per cent for the week-ended September 19 mainly on account hoarding and fears of shortage due to poor monsoon, believe say.
The rate of increase in prices of food items was only 8 per cent in same period last year, though general inflation ruled as high as 12 per cent.
Experts pointed out that the government's poor planning and lack of investment in farm infrastructure have led to food shortage in the country, which is been capitalised by traders.
Besides, the government has also not been taking any steps this year to contain high food prices probably because the overall inflation is below 1 per cent, they added.
Inflation was at 0.83 per cent for the week ended September 19, 2009.
"The rise in food prices is more due to increased profit margin by intermediaries," said senior research fellow Surabhi Mittal of economic think-tank ICRIER.
The reasons for the current price spiral is more than economics. It is not demand-supply mismatch alone, she said.
Echoing similar views, ARPL Agri Business Services managing director Vijay Sardana said, "The current price rise is due to hoarding and poor supply chain management. And the overnment, with no action plan for future, seems to be direction less to set food inflation right."
In the wholesale market, the annual rise in potato price was about by 81.18 per cent during the week-ended September 19 from the year-ago period, while sugar witnessed a jump of 44.47 per cent, according to government data.
Similarly, vegetables rates soared by 49.44 per cent and pulses by 20.05 per cent in the review period.
Food prices were high in retail markets, where potato was ruling in the range of Rs 20-35 a kg and sugar at Rs 35 a kg.
The rise in food prices mainly stems from fears of foodgrain shortage as the monsoon has played truant this yes with almost half of the country facing drought.
Mittal added, "The government has not been able to control the rise in food prices, probably because it has not found the reason for the price rise."
Last year when the core inflation had touched its high of 13 per cent, the government took several measures like banning futures trading and export of different commodities, experts said, adding import was also encouraged by removing customs duty to step up supplies.
"The government has exhausted all its options to contain food inflation," Sardana noted.
