Commenting on the decline in inflation by 0.20 percentage point in January to 8.22 per cent, he said, the "decrease is too small to be comfortable". The inflation was 8.43 per cent in December 2010.
The inflation rate, the Minister hoped, would calm down to 7 per cent by the end of the current fiscal.
"...even though overall food inflation is a matter of concern, we must remember that we have come a long way from the peak...we still have some distance to go in controlling inflation," Mukherjee added.
Containing prices would continue to be a challenge for the government, Mukherjee said, adding the 7 per cent target is still not good enough and that the fight against inflation would continue.
Mukherjee said the food article inflation in January 2011 stood at 15.65 per cent which is more than the 13.55 per cent level in December 2010.
The Finance Minister added that fortunately the inflation rate of manufactured food declined to minus 1.3 per cent.
He, however, said the inflation numbers in the coming months would depend on global developments and the way the commodity prices move in the global markets.
When asked about the impact of likely wheat crop failure in China, he said the government was not aware of the substance of the reports although the wheat prices are already firming up in the global market.
"Already there is a firming up of wheat, food prices in global market", he told reporters.
However, in India the wheat prices declined by 4.94 per cent in January over the same month last year.
Mukherjee attributed the decline in January inflation to monthly variations and said the fall was on expected lines.
"Don`t go by the weekly fluctuation or monthly fluctuations. This was expected. It is nothing unusual," he said.