Mukherjee says current level of food inflation unacceptable

The current level of food inflation is not acceptable, Finance Minister Pranab Mukherjee said on Friday, after the headline inflation accelerated in December on higher food prices.

The wholesale price index (WPI) rose an annual 8.43% in December on higher food prices, which surged 13.55% from a year earlier. The government reiterated its intention to rein-in prices and has said it will ease import restrictions, impose export controls, and intensify purchase of essential commodities. The government plans to also impose curbs on export of goods if needed and has said it would reduce the import duty goods when needed inorder to bring down prices of products. Another immediate step it has taken is to set up an inter-ministerial group under Chief Economic Advisor Kaushik Basu. In its statement of intent, the government has said that investments will be encouraged in supply chains including provisions for cold chain storages. The DIPP and the Planning Commission will jointly work out schemes for this purpose. The government has also promised to take stringent action against hoarding  and said that cartelisation by traders would be strictly dealt with. States will be now asked to exempt horticulture products from the APMC Act. Food inflation, which stood at 16.9% in early January, is a major headache for a government already battling multi-billion dollar corruption cases that have emboldened the opposition.