Worst Of Food Inflation Is Over (07-Feb-2010)
Being under attack over increasing prices, Prime Minister Manmohan Singh stated that the worst of food inflation is over and the situation will ease very soon.
However, he said that as far as food inflation is concerned, the worst is over and he is positive that they will soon be able to stabilize food prices.
Food prices have declined in recent weeks and said that he expects it to continue to the Chief Ministers who voiced serious concern over the rising prices.
The M said that powers under the Essential Commodities Act would be used against hoarders to stop artificial scarcity, in a strict warning to them.
Meanwhile, food inflation nearly 20% in December before moderating a little bit in January due to increasing prices of essential food items such as pulses and vegetables.
The Prime Minister said that good crop prospects and increasing linkages between the domestic and global food prices would help in stabilizing the food inflation.
Moreover, thanking Food and Agriculture Minister Sharad Pawar, who has been under attack both by the Opposition, allies and a section of Congress, for convening the conference, Singh said, they are all very concerned about the distress that the sharp rise in food prices has caused to the common man.
Previously, Tit was said that the increasing inflationary pressure which is due to food inflation has been causing problems to the UPA government and the monetary authorities.
This is although it was known in August-September in 2009 that there would be a major decline in the output of food and cash crops.
The position in relation to fine cereals has not been as bad as feared but, in fact; the latest estimates show that the yield of rice would decline by only 10 million tonnes.
Meanwhile, Vijay Shankar Vyas, member of the Prime Minister''s Economic Advisory Council stated that the high prices of vital commodities are likely to decrease by the end of the rabi season in the next two months.
He said this on the sidelines of the launch of a publication on agriculture, Millions Fed, produced by the International Food Policy Research Institute.
However, earlier, Planning Commission Deputy Chairman Montek Singh Ahluwalia had stated that food prices will start lessening from next month.
The situation suggests dysfunction in distribution as retail prices have risen more than wholesale prices and import cannot be done without subsidy as international prices are higher.
Previously, last year, Finance Minister Pranab Mukherjee had stated that since food inflation has touched a ten-year high, the government will import the important commodities to improve supplies.
He said food prices are increasing and this is an area of concern hence we need to take appropriate measures to see what best could be done by boosting the supply through imports.
Meanwhile, Prime Minister''s Economic Advisory Council had stated that the Reserve Bank might commence pulling out money from the system in order to fight inflation, depending on how food prices move.
It said that although food inflation must be primarily handled through supply management, there is a role for monetary policy as well whereas in the period of shortage if the money supply growth is very strong it will also aggravate the food inflation.
C Rangarajan, chairman of the Prime Minister''s Economic Advisory Council had stated that a high inflation will require monetary action on liquidity.
He said that food prices must be controlled otherwise they have a tendency to lead to manufacturing inflation which will require monetary action on the supply management side.
On the other hand, Finance Minister Pranab Mukherjee had stated that the current trend in inflation in India due to shortage of food items and not due to a demand-push factor.
However, the annual rate of food inflation increased to 17.4% for the week ended January 16 as compared to 16.81% in the previous week.
Food inflation inched up to 17.56 per cent for the week ended January 23 on account of rising prices of potato and pulses. The wholesale price-based food inflation was 17.40 per cent in the previous week.
Potato prices jumped by 44.91 per cent over the last year, while pulses became dearer by 44.43 per cent.The inflation for primary articles, which include food and non-food items, marginally eased to 14.56 per cent in the reporting week from 14.66 per cent in the previous week.
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