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"Yes it is true that milk and vegetable prices are high.
You know some of this is a reflection of economic prosperity and purchasing power," he told reporters here.
Driven by spurt in onion prices and other vegetables, food inflation soared to year`s high of 18.32 per cent for the week ended December 25.
Ahluwalia said, "Food inflation will be much lower by the end of this year than they were a year earlier."
"The trouble with vegetables is that it not very seasonal and we don`t have very good marketing system," Ahluwalia said, adding there was a need to improve agriculture marketing system.
"The solution does not lie in imposing price control or monetary restriction. It lies in modernising agriculture marketing," he stressed.
The state governments, he suggested, should exempt horticulture produce from the ambit of the Agriculture Produce Market Committees (APMC) Act.
"APMC Act is very outdated. It is an instrument which perpetuates monopoly of a group of traders. I know there would be difficulties in doing that (overhauling APMC Act)," he said.
Indian economy expanded by 8.9 per cent during the first half of the current fiscal. The growth in the current fiscal is likely to be about 9 per cent, up from 7.4 per cent in the previous fiscal.
