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Food inflation to fall below 9%: Kaushik Basu

Food inflation to fall below 9%: Kaushik Basu
PTI
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First Published: Tue, Nov 30 2010. 05 36 PM IST
Updated: Tue, Nov 30 2010. 05 36 PM IST
New Delhi: A top advisor in the finance ministry on Tuesday said that food inflation is expected to fall below 9% for the week ended 20 November-- data for which will be released on Thursday -- from 10.15% recorded for the week before that.
“My expectation is (food) inflation figure that you will get this week will not only go into single digit, but is going to go below nine per cent,” chief economic advisor Kaushik Basu told reporters on the sidelines of a conference organised by the finance ministry and think-tank NIPFP.
Food inflation numbers will be released on 2 December and will reflect the figures for the week ended 20 November.
Its fall to below 9% will provide some relief to the government as well as the common man, as food inflation has been in double digits for quite a long. In fact, it was over 20% about a year ago.
Of late, food inflation has been declining because of improved supplies that had been disrupted during the monsoons.
Basu said, however, that inflation continues to be a matter of concern.
He said overall inflation will also fall in November from 8.58% in October. The data for November inflation figure will be released in the middle of December.
Finance secretary Ashok Chawla said overall inflation is likely to fall below 6% by March from 8.62%.
“It (inflation) is coming down and definitely headed to where RBI has projected it would be by March 2011 (5.5%),” finance secretary Ashok Chawla told reporters.
He added that inflation is a concern and is a challenge for inclusive development of the country.
Echoing a similar view, Prime Minister’s Economic Advisory Council chairman C. Rangarajan said that wholesale price inflation is likely to fall between 5.5-6% by March 2011.
“Until it happens, it is a matter of concern,” he added. Rangarajan said he expects food prices to decline in the coming months and said the Reserve Bank’s decision to tighten monetary policy further will depend on behaviour of inflation in the month of December.
“Reserve Bank of India (RBI) will decide (on monetary action) depending on behaviour of inflation in the month of December,” he added.
To tame inflation, RBI had earlier this month increased its short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points to 6.25% and 5.25%, respectively.
It was the sixth time in this fiscal that the apex bank raised key lending and borrowing rates to cool inflationary pressures in the economy.
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First Published: Tue, Nov 30 2010. 05 36 PM IST