Food inflation saw a marginal drop at 16.12 per cent for the week ended June 5, against 16.74 per cent reported for the previous week. However, for the eighth consecutive week food inflation remained over 16 per cent, which might prompt the Reserve Bank of India to consider hike in interest rates to arrest spiralling prices of food items and other commodities.
The slight decline in food inflation was primarily due to softening of prices of fruits, vegetables and tea. Meanwhile, RBI Deputy Governor K. C. Chakrabarty told journalists in Mumbai that inflation was a big worry for the central bank and hinted that monetary policy action could be done before the policy or after. The RBI will be reviewing its monetary policy on July 27. Notably, a few days ago, Union Finance Minister Pranab Mukherjee had said that the food prices would decline by mid-July in view of the likelihood of a good monsoon.
