High inflationary regime not acceptable: FM

Finance minister Pranab Mukherjee, however, expressed satisfaction that inflation in overall primary articles came down during the week

New Delhi: Attributing the latest jump in food inflation mainly to rising prices of protein-based items, finance minister Pranab Mukherjee today said the high inflationary regime was not acceptable and efforts would be made to bring it down, reports PTI.

“... We are in region of high inflationary regime which is not acceptable. It will have to be brought down,” Mr Mukherjee told reporters here while commenting on food inflation, which touched two-and-half month high of 9.13% for the week ended 11th June.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8.96% during the previous week. It was almost 23% during the second week of June 2010.

“Detailed analysis of food items indicate that it is substantially contributed by the milk products, poultry products, fish and certain other items,” Mr Mukherjee said.

The minister, however, expressed satisfaction that inflation in overall primary articles came down during the week.

“On the whole, the figures are not satisfactory... but not disappointing in the sense that the WPI primary articles have come down from 12.86% to 12.62%,” the finance minister said, adding that cereal prices have also moderated during the week.

Primary articles have a share of over 20% in the overall WPI basket.

Referring to the non-food items, Mr Mukherjee said they have “been steadily declining from 23.82% just a month back... every subsequent week from 7th May to 11th June it has steadily declined. That is one important aspect.”

As per the WPI data, inflation in non-food primary articles declined from 23.82% for the week ended 7th May to 18.43% during the reporting week.

Fruits and milk became dearer by 28.66% and 15.30%, respectively, during the week ended 11th June. The other items which became more expensive during the week were onions (11.89%), eggs, meat and fish (10.56%), cereals (4.32%) and potatoes (0.71%).

However, prices of pulses, wheat and vegetables went down during the week. While pulses became 10.34% cheaper, wheat was down 1% and vegetables 9.27%.

Overall, primary articles reported inflation of 12.62% during the period under review, down from 12.86% in the previous week.

Meanwhile, inflation of non-food primary articles stood at 18.43% for the week ended 11th June as against 20.20% during the previous week.

Fibres grew more expensive by 43.77% and minerals by 25.90%. Fuel and power became dearer by 12.84% and petrol was up 33.23% year-on-year.

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IRDA reviewing bancassurance model of selling policies

IRDA member RK Nair stated that there have been instances of banks having resorted to forced selling of policies while advancing loans to customers. “Selling should be need-based and not forced,” he added

Kolkata: The Insurance Regulatory and Development Authority (IRDA) has started reviewing the bancassurance model of insurance penetration as there have been a few instances of mis-selling of policies by banks, reports PTI.

“A panel was set up by the IRDA to look into the bancassurance model. The panel has already submitted its report,” IRDA member (F&I) RK Nair said.

Mr Nair said that some banks had resorted to forced selling of policies while advancing loans to customers.

Typically, the policies get lapsed due to non-continuance by the customer after the first premium is paid, leading to forfeiture of the money by the insurance company, Mr Nair said at the Indian Chamber of Commerce here today.

He said that IRDA was concerned over the practice, for which a panel had been set up.

“Selling should be need-based and not forced,” he said. Mr Nair said better regulatory practices were needed to deal with lapse cases.

On the initial public offer (IPO) guidelines for non-life insurance companies, he said the rules would be similar to those for life companies, but disclosures would be different.

“The nature of disclosures are under finalisation,” he added.

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Food inflation rises to 9.13% for week ended 11th June

The latest food inflation numbers are the highest since the week ended 26 March 2011, when the rate of price rise of food items touched 9.18%. The RBI has already hiked key policy rates 10 times since March 2010, to tame demand and curb inflation

New Delhi: Food inflation in the country touched a two-and-half month high of 9.13% in the week ended 11th June from 8.96% in the previous week and 23% in the second week of June 2010. The rise has been attributed to costlier fruits, milk, onions and protein-based items, reports PTI.

Food inflation has crossed the 9% mark after a gap of one week.

The latest food inflation numbers are the highest since the week ended 26 March 2011, when the rate of price rise of food items touched 9.18%.

As per data released by the government today, fruits became dearer by 28.66% year-on-year, while milk grew 15.30% more expensive.

During the week under review, prices of onions went up by 11.89% and eggs, meat and fish by 10.56% on an annual basis.

Cereals were also up 4.32% and potatoes became dearer by 0.71%.

However, prices of pulses, wheat and vegetables went down during the week. While pulses became 10.34% cheaper, wheat was down 1% and vegetables 9.27%.

Overall, primary articles reported inflation of 12.62% during the period under review, down from 12.86% in the previous week. Primary articles have a share of 20% in the WPI.

The latest surge in food inflation comes close on the heels of the India Meteorological Department’s (IMD) forecast that monsoon rains are expected to be below normal at 95% of the Long Period Average (LPA), with margin for error of plus or minus 4%. A below normal monsoon can have a serious fallout on agricultural output.

Meanwhile, inflation of non-food primary articles stood at 18.43% for the week ended 11th June as against 20.20% during the previous week.

Fibres grew more expensive by 43.77% and minerals by 25.90%. Fuel and power became dearer by 12.84% and petrol was up 33.23% year-on-year.

Yesterday, finance minister Pranab Mukherjee tried to allay concerns over the forecast of ‘below normal’ monsoon rains during the current season and said the projections are only a shade below the annual average.

“Let us wait for some more time... They (IMD) are saying it would be around 95% and normal average is 98%,” he had said.

The latest surge in food inflation numbers belies the Reserve Bank of India’s (RBI) recent claim that headline inflation would be mostly driven by commodity prices in next few months and the rate of price rise in food items would moderate.

Overall inflation was mostly driven by high food prices in 2010.

Headline inflation in the country stood at 9.06% in May. The RBI has already hiked key policy rates 10 times since March 2010, to tame demand and curb inflation.

Food inflation was in double digits for most of last year, before showing signs of moderation since March this year. However, it has again started going up since the second half of May.

The government had to deal with a series of bad news during recent weeks on the economic front. While January-March economic growth stood at 7.8%, the lowest in five quarters, industrial output also slowed down to 6.3% in April.

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