Food inflation likely to be around 8.5%: SMC Global



New Delhi: Food inflation is expected to hover around 8.5 percent in the remaining months of 2011, if the monsoon remains normal as predicted by the meteorological department, according to a report.

Normal monsoon would enhance farm production and enhance purchasing power of farmers which could push sales of FMCG and automobiles by 25 to 30 percent, SMC Global Securities said.

"Good monsoon will definitely bring stability in food inflation at about 8.5 percent for the rest of the year and create aspirations for higher agricultural growth of over 4 percent," SMC Global Securities Ltd Chairman & Managing Director Subhash Aggarwal said.

It wants Union and states governments to introduce reforms in agriculture sector through measures such as scrapping of Agriculture Produce Marketing committees which, it says, gives virtual monopoly to buy crops to certain traders.

Food inflation came back to single digits at 9.5 percent for the week ended March 19 helped by cheaper pulses though vegetables and fruits remained expensive.

India Meteorological Department (IMD) has forecast normal monsoon season this year with the country likely to receive 98 percent rains of the Long Period Average (LPA).

The LPA is the average rainfall over the past 50 years, which is 89 cm.

PTI