Inflation causes food prices to surge | SupportBiz

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Inflation causes food prices to surge

 
India's inflation moved up to 7.23 percent in April as compared to 6.89 percent in the previous month, mainly driven by a sharp increase in the prices of food items, adding to the woes of policy makers as the economic growth remains under pressure, government data showed.

The monthly inflation based on wholesale price index (WPI) was 9.74 percent during the corresponding month of previous year.

In the monthly report, the Commerce and Industry Ministry revised upward the February inflation figure to 7.36 percent as compared to 6.95 percent reported earlier.

Food inflation surged into double-digit. Food inflation rose to 10.49 percent in April as compared to 9.94 percent in the previous month as vegetables, pulses, milk, egg, meat and fish became costlier, pinching the pockets of common people.

Food inflation has re-entered the double-digit zone after a gap of six months.

Expressing concern over the rise in food prices, Finance Minister Pranab Mukherjee called for institutional reforms in agricultural marketing to address the problem.

"Food inflation is a matter of concern, particularly when it has reached a double-digit figure," Mukherjee told reporters while reacting on the monthly data.

"Food inflation can be tackled by creating storing facilities and cold chains, and also requires institutional reforms in the agricultural marketing," the finance minister said.

Prices of vegetables surged by 60.97 percent year-on-year. Potato prices more than doubled. Milk became costlier by 15.51 percent. Prices of egg, meat and fish rose by 17.54 percent. Pulses became costlier by 11.29 percent.

Prices of manufactured products increased by 5.12 percent year-on-year, while price of fuel and power grew by 11.03 percent.

Recent data showed that India continued to face the problem of high inflationary pressure and low growth.

As per the data released by the Central Statistics Office recently, India's industrial output shrank by 3.5 percent in March due to poor show of the manufacturing and mining sectors. It was the first contraction in the factory output since October 2011, when it shrank by 4.7 percent.

The factory output, measured in terms of the Index of Industrial Production (IIP), had registered a growth of 4.1 percent in February year-on-year.

Taking cues from the moderation in inflation, the Reserve Bank of India (RBI) in its annual monetary policy for 2012-13, announced April 17, lowered the key policy rates by 0.50 percent for the first time in three years.

Reacting on the monthly data chairman of the Prime Minister's Economic Advisory Council C Rangarajan said that the rise in inflationary pressure would limit the scope of any further rate cut by the central bank.