Finance Minister Pranab Mukherjee maintained that with the government taking necessary steps to ease the supply-side bottlenecks in farm products, inflation would begin to moderate soon.
Interacting with the media on the sidelines of a function here, Mr. Mukherjee said: “The current inflation pressures are mainly because of supply-side constraints of agricultural products. Necessary steps have already been taken. I hope it will have its impact and from November-December onward ... the rate of inflation will be moderating”.
The latest WPI (wholesale price index) data has revealed that while headline inflation continues to hover near the 10 per cent mark at 9.72 per cent in September, food inflation breached the psychological barrier and soared to 11.43 per cent during the week ended October 15.
Commenting on the Reserve Bank of India's action last week to hike its key policy rates yet again by 25 basis points to contain the price spiral, Mr. Mukherjee said: “There was some liquidity excess which was required to be mopped up and through the adjustment of interest rates, efforts have been made to mop it up”.
On the eurozone's sovereign debt crisis, which will be a major item on the agenda of the G-20 meeting of heads of state at Cannes later this week, the Finance Minister said: “... Emerging economies are looking at the Cannes Summit with great expectations. The basic problem is solvency issues. Leaders will send some strong message”.