"I am worried that food inflation has reached double digit figure. The last week figure was 10.62 per cent. Of course, for previous two weeks it was perilously close to double digit figure. But it crossed that limit," Mukherjee said ahead of his meeting with RBI Governor D Subbarao here. The central bank is scheduled to review interest rates again on October 25. There are expectations of another rate hike in view of spiraling prices.
The Finance Minister said "we shall have to ensure...the supply constraints which is the major reason for the food inflation how to tackle it." Besides prices of edible items, the general inflation has remained stubbornly over 9 per cent since December 2010. The RBI has already raised the benchmark interest rates by 350 basis points since March 2010.
A weak Rupee is also adding to the inflationary pressure as it pushes up the landed cost of imported commodities. India depends on imports to meet 80 per cent of its crude oil requirement. It also imports a large quantity of vegetable oils and pulses. The Rupee plummeted by 27 paise to a 28-month low of Rs 50.07 per US dollar in the Interbank Foreign Exchange.
The Indian currency has lost by 12 per cent against dollar in the last 10 weeks. Meanwhile, Mukherjee opened 40 new branches and 80 ATMs of state-owned Vijaya Bank across the country on its foundation day with a click of mouse.