The Finance Ministry today said food inflation, which fell steeply by almost four percentage points during the third week of July, will take some time to come down to an acceptable level of 5-6 per cent.
"Food inflation is going down, it will take some time before it really comes into a range which is acceptable to the government and which is good for the people," Finance Secretary Ashok Chawla told reporters on the sidelines of a conference on state highways here.
When asked what is an acceptable range, he said 5-6 per cent. The Finance Secretary's statement came on a day when the Opposition NDA and Left Front staged protests against the hike in fuel prices.
Chawla said he agrees with the RBI's estimate on overall inflation. RBI expects inflation to come down to 5.5 per cent by the end of this fiscal, against over 10 per cent in May.
Meanwhile, food inflation declined by a whopping 3.98 percentage points to 12.92 per cent for the week ended June 19. However, food prices are still at an elevated level. To rein in rising prices, the RBI raised short-term lending and borrowing rates by 25 basis points last week.
While announcing the measures -- which came ahead of its scheduled quarterly monetary review on July 27 -- the RBI had said the developments on the inflation front raise several concerns.
"Overall WPI inflation increased to 10.2 per cent in May, 2010, up from 9.6 per cent in April, 2010. Food price inflation and consumer price inflation remain at elevated levels. There has been some moderation in food price inflation, but the price index of food articles continues to increase," it had said.
The central bank further said the prices of non-food manufactured goods and fuel items have accelerated in recent months.
"Although entirely justified in terms of long-term fiscal and energy conservation objectives, the recent increase in fuel prices will have an immediate impact of around one percentage point on WPI inflation, with second round effects being felt in the months ahead," the RBI had said.
The government had last month deregulated petrol prices, leading to a Rs 3.5 a litre hike, while diesel rates were raised by Rs 2 a litre, LPG by Rs 35 a cylinder and kerosene by Rs 3 a litre.
