Union Finance Minister Pranab Mukherjee, while welcoming the drop in inflation under the new index, on Tuesday pointed out that the weight on food in the new index had gone down slightly as a reflection of the fact that with the increasing per capita income, the fraction that the average person now spends on food had gone down a little.
However, he viewed the inflation rate as ‘still high' and indicated that the Reserve Bank of India might take some action in its mid-quarter review of monetary policy on September 16 as there was no room for complacency.
“Inflationary pressure is still there because food prices have gone up because of the erratic monsoon and certain other things... The RBI is constantly watching the situation. We are in touch with the RBI. The RBI and the Ministry of Finance will take appropriate measures at the appropriate time,” he said.
