Finance minister P Chidambaram on Thursday expressed the hope that rate of price rise will ease to below 5% following steps taken by the government and the Reserve Bank of India.
"Several steps, including increase in the policy rate, have been taken and we hope that the WPI-based inflation rate will moderate to a level below 5%," he said at the second South Asian Diaspora Convention here.
Noting that retail inflation has been more intractable, he said both the Wholesale Price Index (WPI) and the Consumer Price Index (CPI) are being driven by food inflation.
"The weights of food items in the two indices are 24.3% and 46.2%, respectively. It may surprise you that there is reasonable stability in the prices of major commodities such as wheat and rice," he said, adding that sugar prices have actually fallen by about Rs 6 per kg. However, he said, prices of fruit, vegetables, meat, milk and eggs are elevated and are driving the inflation rate.
Chidambaram had earlier said that "both RBI and the government are trying number of measures to cool inflation...We are looking at various suggestion that we have got. I am open to suggestion but I am afraid that there are no easy answers to cool retail inflation."
The government has taken several measures including supplying wheat in those locations where prices have been high. So far it has offloaded 500,000 tonne wheat to contain prices. Meanwhile, the RBI has raised policy rate by 0.25 % in its October monetary policy review to contain inflation.
The CPI inflation, measured by movement in the retail prices of food items, soared to a seven-month high of 10.09% in October.
The wholesale price-based inflation too shot up to 8-month high of 7% in the same month. Costlier food items, including vegetables, pushed the October wholesale inflation to 7%, highest in the current financial year.