Good monsoon will help moderate food inflation
New Delhi: Even as food inflation entered into double digits, the Prime Minister`s Economic Advisory Council on Thursday exuded confidence that the rate of price rise of food items will moderate on account of a good monsoon and bountiful harvest.
"I expect food inflation to come down in the conming weeks … as the monsoon has been good. We are almost towards the end of the monsoon and all indications are that the agricultural production will be good during this year," PMEAC Chairman C Rangarajan told reporters here.
Food inflation touched the double-digit mark at 10.05 per cent for the week ended August 20. The inflation, as measured by Wholesale Price Index was 9.80 per cent in the last week.
Food inflation for the first time since March entered the double-digit mark. It was at the same figure of 10.05 per cent for the week ended March 12.
According to the India Meteorological Department, rainfall is expected to be slightly less in September.
However, this will not have much impact on the output as there was a surplus rainfall of 11 per cent in June which has left enough moisture in the ground for crop production.
"One thing that can be done is to push more fooodgrain into the system. We have a fairly large stock of foodgrain in the public distribution system," Rangarajan said.
The Reserve Bank and the PMEAC had earlier projected headline inflation to remain high at around 9 per cent till October.
In its Economic Outlook for 2011-12 released last month, the PMEAC said that while pressure from food inflation has fallen in recent months, the rate of price rice still remains quite high, with the possibility of a further surge in coming months.