FM: Food inflation unacceptably high; to discuss with states on 19 Jan

New Delhi: Finance minister Pranab Mukherjee today said he will meet his state counterparts on 19th January to discuss ways to rein in rising food prices.

"Food inflation at this level is not acceptable and we are trying our best to control it along with the co-operation of state governments," Mr Mukherjee told journalists here today. He said he would meet with state finance ministers on 19th January to discuss the price rise matter, among other issues, reports PTI.

Food inflation fell for the first time in six weeks to 16.91% for the week ended 1st January, but it still remains high as vegetables like onions, and protein-based items have become more expensive. Rising food prices also pushed up overall WPI inflation for December to 8.43% from 7.48% in the previous month.

"WPI month-wise has been moderating, though it is more than it was in November... But it is a little less than October," Mr Mukherjee said. In October, WPI inflation was 9.12%.

The finance minister said inflation is an economic phenomenon which may have monetary factors behind it. He said it could be caused by a mismatch between demand and supply, as well as international factors like high crude prices.

Mr Mukherjee said that in the event of a wide fluctuation in global petroleum prices, no amount of domestic policy measures could bring it down sufficiently. Though consumers could be helped by increasing subsidies in petroleum products, it would fuel inflation in the long run, the finance minister said.

"You can help consumers, but providing not helping inflation in the long run," the finance minister said. Fuel and power inflation rose to 11.19% in December from 10.32% in the previous month.

The finance minister said he would have pre-budget interactions with his state counterparts on Wednesday, when the issue of inflation would also be discussed. "On 19th January I am having a meeting with the state finance ministers in connection with the ensuing budget...I will also raise this inflation issue in the meeting. This is a continuing battle," he said.

The finance minister said that he had himself written letters to states asking them to remove supply bottlenecks in food products. He said monthly wholesale prices have been declining since August, even as weekly food inflation numbers continued to be volatile. "I am emphasising on the way weekly fluctuations took place (food inflation) during the month of December...It is little more than November," he said.

Food inflation remained high through December and also breached the double-digit mark, touching the year's high of 18.32% per cent for the week ended 25th December. After that, it moderated to 16.91% in the week ended 1st January.



Shadi Katyal

6 years ago

The monster of inflation had been with us for quite some time but neither center nor stats have controlled over spending .
The weather also has played part and food prices all over the world has shot up but as we red dependent on subsidiaries from the Govt we feel it is the ruling party responsibility as was case of fuel and petrol.
We must understand the price of Oil in world market and thus adjust to reality of market fluctuations. No Govt in the world can survive for long and any kind of . such subsidies.
Govt must think of population control as sooner or later we will face even shortages of food.
Is this talk of discussion with states just to buy time?

Govt lists new steps to check inflation, to act against hoarders

New Delhi: Promising to crack down on black-marketers and hoarders, the government on Thursday unveiled measures to check spiralling prices by continuing the ban on export of edible oils, pulses and non-basmati rice and it asked states to waive local taxes on essential commodities.

After two days of discussions chaired by prime minister Manmohan Singh, the government has constituted an inter-ministerial group, to be coordinated by chief economic advisor Kaushik Basu, to review overall inflation with particular reference to primary food articles, reports PTI.

In a statement issued by the prime minister's media advisor, the government admitted that food prices have frequently risen at "unacceptable rates" and that the "current bout of inflation is driven by a rise in prices of vegetables and fruits, which is more difficult to manage because they are not held in public stocks."

Attributing the rise in prices, especially onions, to unseasonal rain showers, the government said that fast growth of the economy, combined with the effect of several inclusiveness programmes, put greater income in the hands of the relatively poor, whose food consumption had increased. This has led to a rise in prices of milk, eggs, meat and fish.

On measures it plans to take, the government said it would act against hoarders and black-marketers manipulating market prices, to ensure the products reach markets in time to moderate prices.

"Cartelisation by large traders will be dealt with strictly. The states will be requested to ensure that such action is effectively taken under the Essential Commodities Act, 1955, and the Competition Act, 2002," the government said.

It said that import and export of all essential commodities would be reviewed on a regular basis. The government will "impose controls on exports and ease restrictions on imports, including tariff reduction where necessary, to improve domestic supplies."

Other measures include public sector undertakings intensifying the purchase of essential commodities, particularly edible oils and pulses and distribution through ration shops. The existing scheme of subsidised distribution of edible oils and pulses will continue.

The food inflation, measured by wholesale prices, for the week ended 1 January 2011, moderated slightly, but was still ruling high at 16.91%.
Earlier yesterday, finance minister Pranab Mukherjee said that "unnecessary" panic should be avoided. "We have analysed the situation. We have indicated what further steps we are going to take. We have also indicated that there should not be any unnecessary panic."

State governments would be urged to review Agricultural Produce Market Committee (APMC) Acts and in particular, consider exempting horticultural products from its purview. They would also be requested to consider waiving mandi tax, octroi and other local levies which impede the smooth movement of essential commodities, as well as reducing commission agent charges.

The Committee of Secretaries, headed by the cabinet secretary, will review the price situation with individual states. The government said it is monitoring the situation closely and it is committed to containing the adverse impact of any inflationary pressures on the common man.

The government stated that the only lasting solution to food inflation was in increasing agricultural productivity. Investment will be encouraged in supply-chains, including provision for cold storages, which will be dovetailed with organised retail chains.

The Department of Industrial Policy and Promotion, the Department of Food and Public Distribution and the Ministry of Food Processing Industries and the Planning Commission will jointly work out schemes in this regard.

Support will be extended to facilitate stocking of the bumper kharif crop, including augmentation of storage capacities and upgradation of godowns and other infrastructure.



Shadi Katyal

6 years ago

How is GOI going to control hoarding as it is innate human greed. Has any country been do so?
If the Govt liberalize trade and get out of some of the monopolies and let traders import freely without STC and other PSU,conditions will improve. Other wise we all paying much higher prices as PSU employees have their cut in the prices. Time to move on.
I presume there will be lot of hue and cry for price increase in petrol but since the nation was fed on subsidies, the customer must recognize that this increase is due to world market prices.

WPI inflation shoots up to 8.43% pc on higher vegetable prices

New Delhi: Inflation shot up to 8.43% in December, from 7.48% in the previous month, as prices of certain food and non-food items continued to show an upward trend, according to official data announced today.

After moderating somewhat in November, the overall inflation-measured on the basis of wholesale prices-rose in December, as vegetables like onions, and other protein-based items became expensive.

With inflation showing no signs of moderation, it is widely expected that the Reserve Bank of India will raise key policy rates during its quarterly review of monetary policy on 25th January, reports PTI.

For October, the figure has been revised upwards to 9.12% from the provisional number of 8.58%.

It may be recalled that the food inflation, which accounts for over 14% in the overall WPI (wholesale price index) inflation, has remained high through December at 16.91%.

Worried over the uncontrolled rise in prices, the government yesterday announced measures to try and contain the price rise by a crackdown on hoarders and black-marketers and closely monitoring the export and import of food items.

According to WPI data published today, prices of primary articles (food, non-food articles and minerals) shot up by 16.46% on an annual basis. However, the prices of certain food items declined on a year-on-year basis.

While wheat became cheaper by 5.09%, pulses fell by 10.89% and the price of potatoes went down by 26.57%. During the month, fuel and power prices went up by 11.19%, while manufactured goods became more expensive by 4.46% on an annual basis.

Manufactured items have the highest weightage of 64.9% in the wholesale price index, and inflation is calculated on this basis. Within manufactured products, however, sugar prices eased by 9.91% and leather and leather goods by 1.23% on an annual basis.


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