Food inflation up, PM still hopeful
Tags:
Feb. 24: Food inflation — which measures the rise in prices of food products accelerated marginally — rising to 11.49 per cent for week ended on February 12. Food inflation has been in double digits since December 23, 2010.
The Prime Minister, Dr Manmohan Singh on Thursday said in the Parliament that “I will be the first one to admit that inflation in the last 18 months has become a problem. There were reasons beyond our control. First of all, there was the drought of 2009, there were natural calamities which affected the production of vegetables such as onions.” He also blamed global factors such as the deteriorating world food situation for the rise in inflation.
Economists see inflation coming down to single digit in one or two months due to softening of vegetable prices in the retail market.
“Food inflation should come down to single digit by March,” said Crisil, chief economist, Mr D.K. Joshi. He said that high world food prices could effect the inflation rate in case the prices of edible oil remains high in the international arena and if we need to import it.
The RBI is expected to increase the interest rates in coming month due to high inflation, “RBI will have to show that it is acting otherwise it will send a wrong signal and there would also be political pressure,” said Mr Jagannadham Thunug-untla, SMC Capital.
According to economists, the government’s budgetary allocation on food will rise due to increase in the minimum support prices anno-unced before the rabi crop. To encourage cultivation of pulses, Centre had hiked minimum support prices in June 2010 up to 33 per cent.
Post new comment