Rates may toe food prices line

New Delhi, Sept. 3: Food inflation rose marginally to 10.86 per cent for the week ending on August 21 due to high prices of fruits and cereals. The food inflation rose after declining for two consecutive weeks.

Since January 2010, the food inflation has been in single digit only for two weeks in July. Though India this year is witnessing a good monsoon, economists have been pointing out that it is unlikely that food inflation will fall soon to a comfortable level of 4-5 per cent due to structural changes in India.

The high minimum support prices announced by the government is one of the factors responsible for high food prices. However, economists are hopeful that the food inflation will move in single digits by December end as the farm produce hit the markets.

The overall inflation was at 9.97 per cent in July, after holding in double digits for five straight months until June.

The high food inflation is likely to keep up pressure on the Reserve Bank to continue with its tightening of the monetary policy. With growth nearly back on track, the central bank has shifted its focus from providing stimulus to the industry to containing high inflation. It has hiked interest rates several times this year and may further hike it by 0.25 per cent this month, according to economists.

Last month PM had assured that the government is working to control the double digit inflation.

Post new comment

The content of this field is kept private and will not be shown publicly.
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

Business

The recent fire at the AMRI Hospital in Kolkata on December 8, 2011, claimed the lives of 98 patients.

Mario Mifsud, a Maltese travel agent in Valletta, is a devout Roman Catholic who spent a couple of months in Kolkata working voluntarily for Mother Teresa.