Centre's concern is to rein in food inflation to check its spread to non-food items
Food inflation soared to 17.70 per cent for the week ended March 27 from 16.35 per cent in the previous week, mainly owing to the surge in prices of milk, fruits and pulses.
With the 135-basis-point spurt in food inflation certain to have its adverse impact on the overall WPI (wholesale price index) headline inflation data for March to be released next week, the general expectation among economic analysts is that the Reserve Bank of India (RBI) will opt for further monetary tightening measures by hiking its key policy rates on April 20.
The headline inflation, which includes the variations in prices of manufactured goods and other non-food items, for February is already pegged at 9.89 per cent and is expected to go well over the double-digit mark in March. The government's prime concern now is to rein in food inflation so as to check its spread to non-food items.
According to Prime Minister's Economic Advisory Council (PMEAC) member Govinda Rao, food inflation is now spreading to non-food items and the RBI may have to start tightening the monetary policy. “Tightening the monetary policy is something which may have to be done and that's the only way we can proceed further,” he said.