There is inflationary pressure in the economy: Pranab

Finance Minister Pranab Mukherjee today said there is inflationary pressure in the economy, even as inflation in the food segment declined marginally.

"There is inflationary pressure in the system and these weekly variations (in food inflation numbers) are mainly because of base effect," Mukherjee told reporters here.

Food inflation fell to a seven-week low of 7.61% for the week ended June 25 on the back of cheaper vegetables, pulses and potatoes. In the previous week it was 7.78%.

On an annual basis, there has been a marginal dip on all three items-- food items, non-food primary articles and fuels. During the week, however, fuel index increased to 166.3 from 160.2.

"This six points increase in mainly because of enhancement of prices of diesel, kerosene and LPG. That has its impact," Mukherjee added.

He further said the overall inflation in June could see some upward movement, from 9.06% recorded in May.

As per government data, for the week ended June 25 pulses became over 9%cheaper year-on-year on an annual basis, and prices of vegetables came down by 8.74% and potatoes by 2.13%.

However, prices of other food, especially protein based items, remained high during the week. Eggs, meat and fish prices went up by 10.12% and cereals by 4.26% on an annual basis.

The overall inflation in May stood at 9.06 per cent, higher than 8.66% in April. Analyst expect the overall inflation in June to rise further as the government hiked the prices of diesel, kerosene and domestic LPG.

The government on June 24 raised the price of LPG by a massive Rs 50 per cylinder, of diesel by Rs 3 a litre and kerosene by Rs 2 per litre.

Mukherjee had earlier cautioned against the "suppressed component" of inflation.

"There is a significant suppressed component of inflation as the increase in international crude oil prices has not been passed on completely despite increase in domestic administered oil prices effected in June, 2010, and June, 2011," he had said.