As inflation showed reluctance to decline below nine per cent mark this calendar year till September, the finance ministry termed the current rate of price rise as too high and exuded confidence that it would decline to seven per cent by this fiscal end, the same expectations as expressed by the Reserve Bank of India (RBI).
“I expect around seven per cent (inflation) by March-end. It (current inflation) is too high from comfort level,” Economic Affairs Secretary R Gopalan told reporters here. Overall inflation, though declined to 9.72 per cent in September, 2011, from 9.78 per cent in August, remained at an elevated level. Food inflation for the week ended October 1 stood at 9.32 per cent.
Meanwhile, Finance Minister Pranab Mukherjee said like many other countries, food security and volatility in commodity prices had been a matter of concern for India. “We recognise that increase in agricultural production on a sustainable basis is the only long-term solution to the problems of availability as well as high and fluctuating food and commodity prices,” he said.
The year-on-year rise in inflation has raised the prospects of another rate hike by the RBI later this month, though many economists and industry chambers are calling for a pause due to signs of moderation in economic growth. The RBI has already hiked rates 12 times since March, 2010, to tame inflation.
The RBI has already said controlling inflation was its main priority and a change in its tight monetary policy stance would depend upon softening of prices.
While raising policy rates by 25 basis points in its September monetary review, RBI had also said inflationary pressures were expected to ease towards the latter part of 2011-12. “Stabilisation of energy prices and moderating domestic demand should facilitate this process,” it said.
RBI is slated to come out with its monetary review on October 25.