Concerned over the rising food inflationary trend, Union Finance Minister Pranab Mukherjee on Thursday hinted at more steps to check rising prices even as food inflation surged to a 10-week high of 14.44 per cent. The Cabinet Committee on Prices also expressed concern over the rising prices and reviewed the situation.
The Cabinet Committee on Prices headed by Prime Minister Manmohan Singh met late in the evening and expressed concern over the spurt in prices of eggs, fruits, vegetables, milk and other products of daily use. It also reviewed the prices of essential commodities.
Earlier, Mr. Mukherjee told reporters here that the high inflation rate was not due to statistical technicality called base effect and was for real.
“We are looking into it. So far as onion is concerned, we have taken care of it but the fluctuation in milk, fruit, vegetables and certain commodities have contributed to the inflation,” he said.
The extent of price rise could be gauged from the fact that food inflation rose to 14.44 per cent on a high increase of 21.29 per cent a year ago. High inflation rate last year generally makes inflation rate this year look small, other things remaining the same.
“This is an area of concern. Earlier we thought that it is because of the base effect but it is not merely the base effect. There has been real increase in the prices of certain food items,” he said.
Mr. Mukherjee projected the overall inflation for the current financial year to be around 6.5 per cent.
“I am still holding that financial year-end inflation may be around 6.5 per cent,” he added. Mr. Mukherjee's estimates of year-end inflation are higher than 5.5 per cent indicated by Prime Minister Manmohan Singh and 6 per cent projected by the mid-year analysis of the Finance Ministry for the current fiscal.
Continuing its rise for the fifth consecutive week, food inflation rose to a 10-week high of 14.44 per cent for the week ended December 18 as prices of vegetables, fruits and protein-based products continued to escalate.
“We are waiting for the full monthly figure. Weekly variations are there. Whether these are corrected in the coming week, that is to be seen,” Mr. Mukherjee said. Food articles contribute about 14 per cent in the wholesale price index. On an annual basis, onions became costlier by 39.66 per cent, whereas on a week-on-week basis, the increase was 3.49 per cent.
To cool down onion prices, which had touched Rs.70-80 a kg in retail markets, the Government had announced ban on its exports besides removing customs and countervailing duties on it.
The rate of price rise of vegetables was 29.26 per cent on an annual basis, while on a weekly basis, it was 4.58 per cent.
Fruits became 21.97 per cent more expensive, while milk was 17.75 per cent costlier on a year-on-year basis during the week under review. Similarly, egg, meat and fish prices rose by 20.34 per cent on an annual basis.