Supply constraints driving food prices up: Cabinet Secy
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Last Updated: Monday, November 16, 2009, 16:02
New Delhi: Amid inflation doubling to 1.54 per cent in October on monthly basis, the government on Monday admitted that there have been supply constraints on some food items, leading to rising prices of those items.

"Primarily there has been supply constraints in particular commodities. As it is, the overall rate of inflation is just over one per cent. In particular commodities, there has been, not only in India but globally, supply constraints which is reflecting in this (price rise)," Cabinet Secretary KM Chandrasekhar told reporters here today.

It can be noted that some food times, especially vegetables, saw major price increases. Within the past one month alone, onion became costlier by around 30 per cent and potatoes by over 11 per cent.

Even as inflation shot up massively from 0.50 per cent in September to 1.54 per cent in October, overall food price came down in October by one per cent and vegetables by 16 per cent.

The Cabinet Secretary admitted that inflation has to be watched and expressed confidence that prices would moderate once the supply situation improves.

Speaking on the sidelines of a CII seminar, Chandrasekhar informed that a number of measures have been taken to augment supply of food products and procurement is going well.

"Import duties have been removed on most of these goods, free import is allowed, procurement is going well; last year it did well, and this year it is even better," he added.

‘Govt watching sugar prices’

The government today attributed high sugar prices to global shortages and said it is closely monitoring the situation in the domestic market.

"The sugar prices are pretty high all over the world, primarily because of global shortage," Chandrasekhar told reporters. He said the Centre is keeping a watch on prices.

Domestic retail prices for sugar have risen by 90 per cent to Rs 38 a kg from Rs 20 a kg during October last year, according to government data.

In 2008-09 sugar season (October to September), India's sugar production, the world's largest consumer, fell to 15 million tonnes from 26.4 million tonnes in the previous year.

The government has taken steps like allowing duty-free imports of both raw and white sugar and banning of futures trading in the commodity.

Global prices have been firming up on expectation of lower production in Brazil, a major sugarcane growing country.

According to the International Sugar Organisation, global sugar output is estimated to have declined by 7.1 per cent to 155.3 million tonnes in the 2008-09 season.

On wheat imports, the government said it has no plans to go in for imports.

"There is no plan to import wheat. The situation is comfortable," he said.

Bureau Report

First Published: Monday, November 16, 2009, 16:02

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