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Pranab says inflation can become manageable

Last updated on: January 12, 2012 14:42 IST
Expressing satisfaction over the fall in food prices for the second week in a row, Finance Minister Pranab Mukherjee said if the trend continues for some more time, overall inflation will become manageable.

"Food inflation is still negative... There is a declining trend... If this trend continues, then the overall inflation will be manageable," said Mukherjee. His comments came after food prices fell for the second consecutive week as food inflation remained in the negative zone at (-) 2.90 per cent for the week ended December 31, 2011.

Food inflation, as measured by the Wholesale Price Index, stood at (-) 3.36 per cent in the previous week. Headline inflation, which also factors in manufactured items, fuel and non-food primary items, has been above the nine per cent-mark since December, 2010. It stood at 9.11 per cent in November, 2011.

Food inflation has a 14
per cent share in the overall Wholesale Price Index basket. For the government and RBI, headline inflation of around five per cent is the 'comfort zone'.

Last week, Mukherjee had said the decline in food prices will help bring down headline inflation to less than seven per cent by March. The fall in the rate of price rise of food items since the first week of November is substantial, as it has plummeted from double-digit territory into the negative zone.

The Reserve Bank had earlier said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to seven per cent by end of the fiscal.

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