Inflation will moderate to 6 pc by March-end: Pranab

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SME Times News Bureau | 14 Feb, 2012
Annual inflation slipped to 6.55 percent in January, but Finance Minister Pranab Mukherjee Thursday said he expected it to come down further to around 6 percent by the fiscal end.

January's headline inflation came in lower than what was expected and at its slowest in 26 months, bringing relief to the policymakers and raising hopes of a rate cut by the Reserve Bank of India (RBI) sooner.

Inflation, based on wholesale prices, was logged at 7.47 percent in January.

"I am confident that moderation in inflation would continue in the coming months, though softening in the prices of manufactured goods despite the rapid decline in non-food primary inflation, may be more gradual," said Mukherjee.

However, the finance minister said current inflation was still on the higher side.

"I think it should be further reduced since it is still not at acceptable level. I do hope moderation will come," he added.

The RBI predicted overall inflation to be around 7 percent by March-end. The central bank had said that it was willing to wait until inflation came firmly under control before initiating rate cuts.

The primary articles index rose 2.25 percent, while that for food registered a negative growth of -0.52 percent in the month under review, according to data released by the ministry of commerce and industry Thursday.

Manufactured products, the biggest constituent in the wholesale price index, rose by 6.49 percent, while inflation for fuel increased 14.21 percent.

The figures for November were revised upwards to 9.46 percent, compared to the provisional figure of 9.11 percent.

Mukherjee, however, cautioned that upward price pressure on milk, edible oils and meat products could push up food inflation.

"The main worry going forward is on edible oils, milk and some animal proteins which may continue to threaten food inflation, as the required institutional reforms in agricultural marketing and improvement in storage and cold chains will operate with a lag," said Mukherjee.