Speaking to reporters, he said, "The situation suggests dysfunction in distribution as retail prices have shot much more than wholesale prices and import cannot be done without subsidy as international prices are higher."
"It's a complex situation and cannot be corrected with monetary polices ... prices built up is on speculation post drought. Stocks of cereals are adequate and prices can be moderated and it will be from January," he said.
He said the rise in food prices was a great matter of concern. "There were some increased expectations but for some products like vegetables the increase is excessive."
Food inflation climbed to 20 per cent during the first week of Dec 2010, driven mainly by higher prices of potato, other vegetables and pulses.