Finance Minister Pranab Mukherjee on Thursday indicated more steps to check rising prices as food inflation surged to a 10-week high of 14.44 % while pegging the overall inflation rate at 6.5 % by this fiscal end, a bit higher than projected earlier.
The high inflation rate is not due to (statistical technicality called) base effect and is real, the Finance Minister told reporters in New Delhi.
"We are looking into it. So far as onion is concerned, we have taken care of it... but the fluctuation in milk, fruit, vegetables and certain commodities have contributed to the inflation," Mukherjee said.
The extent of price rise could be gauged from the fact that food inflation rose to 14.44 % on a high increase of 21.29 % a year ago.
High inflation rate last year generally makes inflation rate this year look small, other things remaining the same.
"This is an area of concern... earlier we thought that it is because of the base effect but it is not merely the base effect. There has been real increase in the prices of certain food items," he said.
Mukherjee projected the overall inflation for the current financial year to be around 6.5 %.
"I am still holding that (financial) year-end inflation may be around 6.5 %," he said.
Mukherjee's estimates of year end inflation, however, is higher than 5.5 % indicated by Prime Minister Manmohan Singh and 6 % projected by the Mid-Year Analysis of the Finance Ministry for the current fiscal.
Continuing its rise for the fifth consecutive week, food inflation rose to a 10-week high of 14.44 % for the week ended December 18 as prices of vegetables, fruits and protein-based products continued to escalate.
"We are waiting for the full monthly figure. Weekly variations are there. Whether these are corrected in the coming week, that is to be seen," Mukherjee said. Food articles contribute about 14 % in the wholesale price index.
On an annual basis, onions became costlier by 39.66%, whereas on a week-on-week basis, the increase was 3.49%.
To cool down onion prices, which had touched Rs 70-80 a kg in retail markets, the Government had announced ban on its exports besides removing customs and countervailing duties on it.
The rate of price rise of vegetables was 29.26 % on an annual basis, while on a weekly basis, it was 4.58%.
Fruits became 21.97 % more expensive, while milk was 17.75 % costlier on a year-on-year basis during the week under review.
Similarly, egg, meat and fish prices rose by 20.34% on an annual basis.