Inflation a concern but 'base effect' also to blame: Mukherjee | business | Hindustan Times
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Inflation a concern but 'base effect' also to blame: Mukherjee

business Updated: Aug 14, 2010 15:54 IST

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With India's food inflation once again creeping to double-digit level, Finance Minister Pranab Mukherjee on Friday said the high level of price rise was a matter for worry but the "base effect" was magnifying the ground reality.

"Of course it's a concern," Mukherjee told reporters on the margins of a conference to assess the performance of state-run enterprises, when asked about the rise in food inflation to 11.41 percent for the week ended July 31.

"But there is also the base effect," said the finance minister, alluding to the statistical phenomenon that makes the inflation rate appear higher when the rise in the price index is lower in the previous year.

The finance minister also said he did not see much of an impact on interest rates, particularly after the tightening of the monetary policy by the Reserve Bank of India (RBI) last month, that raised some key policy rates.

"I don't think there is any need to increase interest rates. There is enough liquidity in the system and the banks know it," he said.