Food inflation may ease in next 2-3 months, says Fin Min official

Food inflation is expected to plateau going ahead.

The Union Finance Ministry expects food inflation to cool down in the next two-three months as issues that have triggered higher food prices are manageable, a senior official at the ministry said.

"Inflation may plateau going further, especially the food part," the official said, adding that the steps that have been taken by both the central government and the Reserve Bank of India will likely keep a lid on inflation.

India's headline retail inflation rate crashed past the upper bound of the Reserve Bank of India's (RBI) 2-6 percent tolerance range in July and shot up to a 15-month high of 7.44 percent, spurred on by a massive increase in vegetable prices, data released by the Ministry of Statistics and Programme Implementation on August 14 showed.

On plans to increase spending to curb inflation, the official said, "there should not be talk of more expenditure right now, we are not even half way into the current financial year. Expenditure patterns should not be prejudged until pre-Budget meetings are over," the official said on the condition of anonymity.

The CPI inflation of 7.44 percent last month was driven by food prices, which grew at 11.51 percent. Within the food basket, the sharpest surge was seen in the price of vegetables that climbed by 37.34 percent. This was followed by pulses at 13.27 percent, and cereals at 13.04 percent.

Inflation in the sub-categories of fruits, and meat and fish was lower at 3.16 percent and 2.25 percent, respectively. In the oil segment, a deflation of 16.80 percent was recorded.

Among vegetables, the spike in inflation was mainly being driven by tomato, whose prices have been surging since early July. The kitchen staple was sold at as high as Rs 250 per kg in the retail market, up by around 350 percent.

Over the past week, however, tomato prices have relatively cooled down due to the arrival of fresh crops. "Tomato prices are ruling in the range of Rs 50-70 per kg in retail markets across the country at present," Consumer Affairs Secretary Rohit Kumar Singh told news agency PTI on August 21.

The government also swung into action last week as the prices of onion was feared to surge. An export duty of 40 percent was announced on the bulb on August 19, after its maximum price Rs 67 per kg in some retail markets, and the modal price across India ranged Rs 31 per kg. The modal price was higher as against Rs 27.34 a month back and Rs 24 a year ago.