Food inflation at 8.74 pc, PM calls for enhancing food security
With food inflation rising from the one-and-half-year low of 8.28 per cent for the week ended April 2, Singh today admitted that persistent inflation, specially of food items, had become a cause for concern.
"We have to make a concerted effort to enhance our food security… during the past year and a half, persistent inflation, especially in the food sector, has become a cause of concern," the Prime Minister said.
The suprise swing in food inflation from a three-week declining trend is likely to add fresh fuel to the government worries.
Even as the Prime Minister said the government has a consistent policy to control inflation without hurting growth, food inflation is marking its own trajectory despite the RBI raising the interest rates eight times since March 2010.
However, the central bank has admitted the limitations of its monetary policy, saying that raising of interest rates has limited impact on food prices, as the root of the problem lies in supply side constraints.
Significantly, Singh today said, "The needs of a growing and increasingly more prosperous population can only be met by enhanced production of a diversified basket of agricultural products."
During the week under review, fruits became dearer by 25.25 per cent on year-on-year, while egg, meat and fish were 14.96 per cent more expensive. Onions became expensive by 8.28 per cent.
"The numbers released today are clear indication that inflation is spreading fast and going out of control. I feel monetary measure alone would not be able to achieve the balance of growth and inflation. Changes have to be made at the fundamental level," said broking firm KASSA`s director Siddharth Shankar.
Yes Bank Chief Economist Shubhada Rao feels the inflation may come down in the coming weeks.
"The base (rate) has a role to play. Food inflation may see some moderation week-on-week as buffer stocks are adequate to calm prices," Rao said, adding, ""We project the WPI to average 8 per cent this fiscal."
Food inflation in the corresponding week of last year was 20.31 per cent.
The Wholesale Price Index (WPI) has remained above the 8 per cent mark since February 2010.
For the week ended April 9, cereals` prices went up by 4.48 per cent on an annual basis and, rice and wheat became expensive by 2.08 per cent and 1.31 per cent, respectively.
Vegetables overall became dearer by 1.53 per cent. Potatoes were up by 1.21 per cent. Milk became expensive by 4.05 per cent on an annual basis.
Pulses, however, bucked the trend and witnessed a decline of 5.67 per cent.
For non-food articles, inflation was 27.69 per cent year-on-year. Fuel and power became dearer by 13.05 per cent, while petrol was up 21.81 per cent.
"Fuel prices may see some upward revision after elections process in four states and one union territory is over," Rao said.