Inflation remains principal concern, to fall next yr: FM

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New Delhi, Feb 28 (PTI) The government today saidinflation continues to remain a concern, but exuded confidencethat the RBI''s monetary policy will lead to moderation ininflation numbers in the coming months.

"But it (inflation) clearly remains a concern... But Iexpect the policy taken by RBI to further moderate inflationin coming months... Average inflation to be lower next year,"Finance Minister Pranab Mukherjee said while presenting theBudget for 2011-12.

He, however, said that inflation, specially high foodprices, continue to worry and also called for improvement ofdistribution and marketing systems to bridge the gap betweenwholesale and retail prices.

"... Difference in wholesale and retail prices is notacceptable," Mukherjee said.

Regarding food inflation, he said: "The total foodinflation declined from 20.4 per cent in February, 2010, toless than half, at 9.3 per cent in January, 2011."

Mukherjee also put emphasis on increasing agriculturalproductivity to curb food inflation.

The government and the RBI have been under pressure dueto inflationary pressure, particularly of food products.

The RBI has hiked short-term lending and borrowing ratessix times during the current fiscal, including a hike of 25basis points in its third quarterly review in January.

The government had earlier said it expects inflation tofall to around 7 per cent by March-end and dip to around 5-6per cent by the middle of the year.

However, the Economic Survey released last week said thehigh growth rate would also affect inflation, which would be1.5 per cent more than what it would have been otherwise.

The Survey had also said that high global commodityprices, particularly crude prices, are going to be affecteddue to the turmoil in the Middle East and this may affect thedomestic trend also.

Headline inflation has been above 8 per cent sinceFebruary, 2010. It was 8.23 per cent in January this year.

Food inflation has been in double digits for the most ofthe current fiscal. According to the latest data, foodinflation stood at 11.49 per cent for the week ended February12.

Skyrocketing prices of vegetables found in every Indian''skitchen, particularly onions, even forced the government to gofor an export ban for some period earlier in the fiscal. PTIPPB ARV

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