Attributing high 16 per cent food inflation to the monsoon and supply shortfalls, Finance Minister Pranab Mukherjee on Thursday exuded confidence that the price line will slide after the rainy season and on the strength of monetary policy.
Expressing confidence that RBI measures to mop up excess liquidity will tame food inflation, Mukherjee said, "I do feel that after the monsoon period is over, and I do feel it would over in a few days, there would be some moderating influence and the monetary policy which we have adopted will also mop up the excess liquidity from the market."
Food inflation increased in the week ended September 18 as the prices of cereals, fruits, select vegetables and milk rose on account of supply disruptions caused by heavy rains and floods.
"Inflation has increased and particularly the number of food items, like jawar or bajra and pulses, fruits, vegetables, meat, eggs. . . All these food items prices have increased. As a result, the WPI on food items has increased by more than half a percentage point," Mukherjee said.
Most parts of the country received good rains this season, except in the eastern and northeastern regions, which are reeling under drought conditions.
To tame inflation, the Reserve Bank of India earlier this month raised key policy rates by up to 50 basis points for the fifth time this year.
As part of its first mid-quarterly review of monetary policy, the RBI had upped its key short-term lending (repo) rate by 25 basis points and borrowing (reverse repo) rate by 50 basis points to 6 per cent and 5 per cent, respectively.
Image: Pranab Mukherjee. | Photograph: Dipak Chakraborty
