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Mar 19, 2010, 09.32 AM IST | Source: CNBC-TV18

Policymakers' take on cooling food inflation

India's food price index as on March 6 was down by a sharp 1.1% compared to its week ago levels largely due to a fall in the prices of vegetables and pulses.

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India's food price index as on March 6 was down by a sharp 1.1% compared to its week ago levels largely due to a fall in the prices of vegetables and pulses.

With this the year-on-year food inflation has fallen to 16.3% from 17.8% week ago.

The fuel index rose from 11.38% to 12.68%, but that was expected, since this was the week when fuel prices were hiked. Following the lower food inflation rate, bond prices rose.

The ten year bond ended at 89.58, up 36 paise from Wednesday's close. Which means its yield fell by 6 basis points to 7.90%.

Commenting on the same, Planning Commission Deputy Chairman Montek Singh Ahluwalia told CNBC-TV18 that it was unrealistic to expect inflation to come down suddenly. He said it would happen but in two months time. In the next two months you will definitely see the inflation coming down. I am glad that the latest weekly numbers show a decline. But you shouldnt get excited by one-week number. But in two months inflation will be lower I am sure of that.

Chairman of the Prime Minister's Economic Advisory Council, C Rangarajan said, The budget has given a clear indication that we are in the process of fiscal consolidation. There is a substantial reduction in the fiscal deficit for the next year from the current year and it is also indicated that there will be further reductions in the following year. Therefore definite signals have been sent out regarding fiscal consolidation.

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