Thursday, June 14, 2012

Pranab Mukherjee: Inflation to remain around 6.5-7.5% in current fiscal

Ligand hopes on good monsoon, the government today said the inflation rate for the current fiscal will be around 6.5-7.5 per cent, and steps must be taken to address supply constraints.

"I hope that a range of inflation would be around 6.5-7.5 per cent during the year. I hope if monsoon is good enough, then it would be possible that that kind of pressure would be sorted out," finance minister Pranab Mukherjee told reporters here.

The government, he added, that "have to deal with supply constraints, (and questions) cold chaining and warehousing facilities."

The minister was commenting on the WPI inflation, which inched up 7.55 percent in May, from 7.23 percent in April due to spurt in prices of potato, pulses and wheat, although onion and fruits have shown a declining trend.

Overall food inflation reached 10.74 percent in May, from 10.49 percent in the previous month.

"Some of those foods that are seasonal such as pulses, vegetables, ... these are the goods in which prices have increased," Mukherjee said.

He further added that core inflation, which went from marginally to 5.74 percent in May, is continuously coming down from December onwards. It was 8.31 percent in December 2011.

Manufactured inflation too has shown some easing, and was 5.02 percent in May. It was 5.12 percent in April.

Monsoon rains are crucial for agriculture as only 40 percent of the cultivable area is under irrigation. The farm sector contributes to only 15 per cent of GDP, but employs about 60 per cent of the population.

On the back of a good monsoon in 2010 and 2011, the country harvested a record foodgrains production of 245 million tonnes and 252.56 million tonnes respectively.


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