Are rising prices a blessing in disguise? It appears so going by Planning Commission Deputy Chairman Montek Ahluwalia’s attribution that rural prosperity is leading to higher food consumption.
At the same time, the top economist of the country shared his concern over the price line saying that despite easing to 15.53 per cent as of October 9, 2010 from 16.37 per cent a week ago, food inflation was “high”.
“If rural income would go up, more people will be buying vegetables, then their prices would go up. (Food) inflation is not up because of grain prices, they are moderate. It is up because of milk, fruit and vegetables,” Mr. Ahluwalia told reporters here.
Economists had earlier forecast food inflation to fall with easing of supply side pressures. Heavy rains in most north and northeastern States had disrupted supply of edibles over the last three months.
“Supply disruptions are gradually fading, and this will help bring down food inflation. I expect food inflation to come down to single digit by December end,” Crisil chief economist D.K. Joshi said.
Mr. Ahluwalia said: “I think it (food inflation) is still high. I am glad that it has come down. When the (overall inflation) data for November will become available then... in case of food, you will see a much bigger decline.”
He noted that high food inflation was not because of prices of foodgrains, which he said have moderated.
“When overall inflation moderates and within that if vegetable prices go up, we should not mind,” he added.
