Prime Minister’s key economic advisor C Rangarajan on Thursday hoped that inflation will come down to 6.5 per cent by end-March and suggested that steps should be taken to release more food stocks to ease price pressure.
The wholesale price index-based (WPI) inflation eased to 6.62 per cent in January, from 7.18 per cent in December, 2012, as per official data released on Thursday.
“The decline in inflation is a welcome and reassuring sign. I expect March end inflation to be 6.5 per cent,” said Dr. Rangarajan, the Prime Minister’s Economic Advisory Council (PMEAC) Chairman, adding that January inflation has moderated more than expected.
This is the fourth straight month of decline in the WPI numbers.
Retail inflation, however, remained in double digits at 10.79 per cent in January mainly on account of higher prices of vegetables, edible oil, cereals and protein-based items.
Dr. Rangarajan said with the moderation in manufacture or core inflation in January, there was a need to focus on supply side easing of food articles.
“Retail inflation is still high. The WPI inflation in primary and food articles are at higher levels. Efforts should be made to release larger stocks of food articles in the market,” Dr. Rangarajan said.
Inflation in manufactured items category witnessed a decline and stood at 4.81 per cent in January, from 5.04 per cent in the previous month.
Dr. Rangarajan said he expects core inflation to be below 4 per cent by end March.
Inflation in food articles category, which have a 14.3 per cent share in the WPI basket, rose to 11.88 per cent in January, from 11.16 per cent in December.
Prices of onion witnessed a sharp increase by 111.52 per cent during January. The rate of price rise was 69.24 per cent in December, 2012. Vegetables became dearer by 28.45 per cent and potatoes by 79.07 per cent in January as compared to the same period of last year.
Keywords: wholesale price index, inflation, PMEAC, Dr. C. Rangarajan
Assuming the economy does not fall apart, inflation is unlikely to come down for 2 reasons. First, recent increases in oil price. And second, the gradual reduction of subsidies.
Mr.Rangarajan, I am afraid is living in a dream world. With
increase in fuel prices, inflation will just not come down. On the
otherhand it will tend to increase. These statements are being
made to fool the aam admi who has reached a stage where he is
unable to eat a decent meal even once a day. The rise in prices
has totally eroded people's savings and has now reached such
proportions that nutrition, as such, of most people has gone
down drastically. These are all due to wrong economic policies
and a lopsided tax system. Fleecing of the middle class by direct
taxes and the poor by indirect taxes is the order of the day.
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