The Hindu : Business : Food inflation surges to 15.10 % under new series

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Food inflation surges to 15.10 % under new series

Special Correspondent

NEW DELHI: With heavy rains disrupting supply of essentials and pushing up prices, food inflation surged to 15.10 per cent during the week ended September 4 under the new Wholesale Price Index (WPI) series which has 2004-05 as the base year.

Even as the price spurt in food items based on the new WPI series having a lower weight assigned to the edibles segment is not comparable to the previous week's inflation figure of 11.47 per cent under the old series with 1993-94 prices as the base, the higher burden on the common man is evident from the fact that food inflation during the like week last year was at 14.64 per cent, as per calculation under the new series.

No gainsaying, therefore, that rising food prices has been one of the government's prime challenges and the Reserve Bank of India hiked its key rates.

In its mid-quarter review of monetary policy, the apex bank said: “Inflation remains [a] dominant concern in macroeconomic management...prices of food articles, which according to the new series rose by over 14 per cent in August are still contributing to the [price] pressure.”

In agreement with the RBI's tight money policy as inflationary pressures are still there in the economy, Finance Minister Pranab Mukherjee said: “I think it [the RBI move] is in the right direction because now the corridor [difference between repo and reverse repo rates] has been narrowed down and still inflationary pressure is there in the system…I think the adjustment of repo and reverse repo will help to mop up additional liquidity.”

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