Respite from soaring prices of essential commodities is something the common man may not be able to think of in the near future as dearer food items, especially onions and vegetables on the whole, took inflation for the month of September to a seven-month high of 6.46 per cent.
Ironically, Food Minister KV Thomas blamed greater cost of production owing to NREGA (the UPA’s flagship programme) wages, besides higher MSP, for the rise in inflation.
Though the Wholesale Price Index-based inflation went up for the fourth month in a row, it touched its highest point in September 2013, according to data released by the Government on Monday.
Inflation was 6.1 per cent in August and 5.85 per cent (revised upward from 5.79 per cent) in July. Overall, food inflation increased at a higher rate in September at 18.40 per cent as compared to the previous month. Inflation in this segment was 18.18 per cent in August.
The sharpest increase was in onion prices which jumped by 322.94 per cent in September, over the same month last year. Vegetables in general were costlier by 89.37 per cent year-on-year making life difficult for the common man.
As if this was not enough, fruits, too, were costlier by 13.54 per cent year-on-year during September.Even Planning Commission Deputy Chairman Montek Singh Ahluwalia accepted that if inflation is higher than 6 per cent then it is at an “uncomfortable” level. However, he expressed confidence that it would ease in the coming months.
The Reserve Bank, which is scheduled to unveil the second quarter review of monetary policy on October 29, will factor in the rising inflation while deciding on the policy rates amid rate cut demand by industry to boost economic activities.
The August IIP data, a key economic indicator, showed that industrial output expanded by meagre 0.6 per cent.The data further revealed that there was decline in prices of egg, meat, fish, beverages, tobacco, cereals, rice and wheat in the month under review over August.
The inflation in the manufactured items segment was 2.03 in September year-on-year.Inflation for lPG and petrol was at 9 per cent and 9.64 per cent, respectively, on annual basis.
“I agree that inflation rate is still on the high side but it will soften in a month or so. The comfort level of inflation is 5-6 per cent and if it is higher than 6 per cent, it is uncomfortable,” Ahluwalia told reporters.
He said the steps taken by the Government to de-stock the excess food stocks would result in cooling off of prices in few weeks ahead.A Barclays report said onion prices are reported to be softer in October, and “we continue to expect food prices to normalise somewhat in the coming months on the good monsoon and a large increase in sowing”.