Finance Minister Pranab Mukherjee on Tuesday hinted at a tighter monetary policy regime, saying the Reserve Bank of India would take appropriate policy measures to bring down inflation in the coming weeks.
The wholesale price index-based inflation rate for May climbed to 10.16 per cent, driven by costly food items that have been so since the poor monsoon last year. The weather office has forecast a near normal monsoon this year, although it has been slow to advance across the country.
“Food inflation has started coming down a little bit, but not fully. With the expectation of a good monsoon and crop, I think a moderating influence will be there from mid-July onwards,'' Mr. Mukherjee told reporters here.
Food inflation stood at 16.74 per cent as of May 29, but is off the 20 per cent high seen in December last. “So far as the monetary part is concerned, the RBI will look into it and consider it. Even in the last policy announcement, 25 basis points were increased. So as and when the RBI feels appropriate steps are required to be taken to control the inflation, it will do so,” he said.
The RBI has raised the rates twice this year to check food inflation from spreading to manufactured goods, but with inflation continuing to rise, economists expect another round of policy action even before the scheduled July 27 review of the monetary policy. The Finance Minister attributed the rising prices to shortage of certain commodities, besides the impact of base effect.
“To tackle the problem, whatever is required from the supply side had been taken. Some commodities are in short supply and to meet the balance, we have allowed duty free imports,'' he said.
On the possibility of a hike in fuel prices, Mr. Mukherjee said: “The Kirit Parikh committee report is there. We have had one meeting of the Empowered Group of Ministers (EGoM). We could not take a decision. As and when the meeting takes place, the government will take a decision.”