New Delhi: Encouraged by the moderation in food inflation, finance minister Pranab Mukherjee on Thursday said the rate of price rise of kitchen items would decline further in the coming weeks, though prices of non-food items would continue to remain a matter of concern.
“We hope to see further moderation in food inflation in the coming weeks,” Mukherjee said in response to a decline in food inflation to an 18-month low of 7.7% for the week ended 30 April, due to a drop in the prices of pulses and vegetables, especially potatoes.
The recent monetary policy announcements should help in addressing these concerns, he added.
However, the minister said, “There are concerns on the price momentum in non-food articles... Sustained high non-food primary prices are creating cost-push inflationary conditions in the manufacturing sector.”
He further said, “Even though food inflation is declining, the concern on higher core inflation remains.”
Cost-push inflation is a type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available.
Industrial growth slowed down to 7.8% in 2010-11 from 10.5% in the previous fiscal mainly on account of the poor performance of the mining and manufacturing sectors, coupled with lower production of capital goods, data released on Thursday showed.
The manufacturing sector, which accounts for almost 80% of the index, saw its annual growth fall to 8.1% in 2010-11 as against 11% growth in the previous fiscal.
The growth in factory output in March, as measured in terms of the Index of Industrial Production (IIP), indicated that it has improved to 7.3% from 3.6% in February this year.
But the IIP growth in the March last year was much higher at 15.5%.
The decline in the food price segment is seen as a breather for the government, as inflation has stubbornly remained high despite its fiscal measures and the RBI’s monetary steps.