New Delhi: The Planning Commission on Monday said
food inflation will come down next month from a more than a
decade's high of around 20 per cent, as apprehensions about
adverse effect of drought were easing.
"I think this fear of negative impact of drought being
reduced, there will be a softening in food price inflation in
the next month," Planning Commission Deputy Chairman Montek
Singh Ahluwalia told reporters on the sidelines of a FICCI
function here.
He further said that inflation at the moment was not
caused by excess money supply but was dominantly on account of
surge in food prices.
While refusing to speculate on what needs to be done to
curb inflation, he said, "When inflation begins to go up, one
of the instruments that people use is monetary instrument."
RBI is scheduled to review its monetary policy stance
later this month and has dropped hints of tightening money
supply. Ahluwalia, however, said that it is a complex issue as
the policy makers have to deal with only one set of price rise
(food).
Following widespread drought and floods in various parts
of the country, food inflation climbed to more than a 10-year
high of 19.95 per cent in December, driven mainly by higher
prices of potato, other vegetables and pulses.
According to latest figures, food inflation stood at
19.83 per cent during the third week of December.
Montek also said in case of India, lots of measures to
curb inflation have to be directed towards reining in
expectations, managing the supply side and better utilisation
of existing food stocks.
Earlier last week in Kolkata, Finance Minister Pranab
Mukherjee had also said there was no sign in the economy that
excess liquidity is causing the current inflationary
pressures.
"I had a detailed discussion with the RBI and found that
there is no reason to believe that excess liquidity is
contributing to inflation in the economy," Mukherjee had said.
However, he had acknowledged that average food prices rose
by 19-23 per cent even in the wholesale price index, which is
really high.
"Unlike instant coffee, there is no instant solution to
such vexed problems as inflation," the finance minister had
said when asked about government steps to curb the rising food
prices.
PTI
First Published: Monday, January 04, 2010, 18:51