Food inflation in the previous week was at 8.76%, this is far less than the rate of inflation reported during the same week in last year, i.e. in 2010, the rate of food inflation was 20.91%. Experts across the board are of the opinion that, inflationary pressure will haunt the government again as global commodity prices including oil is rising further. Going forward, it will not be a surprise that the central bank, Reserve Bank Of India, will hike the interest rate.
At the Asian Development Bank"s annual meeting in Hanoi, Pranab Mukherjee said that the recent volatility in international prices of food and fuel, had thrown up fresh challenges in management of inflation. This could well turn out to be a long-term global problem.
“... Management of inflation, in addition to domestic efforts, will increasingly have to be a globally coordinated effort," he said. “Inflation, particularly, the increase in food prices is a major concern for India as well as other developing countries. We are trying to reduce it to supply and demand side management."
Mukherjee stated at the Vietnamese capital, “We are looking at easing of the price situation in India with adequate buffer stock and hopefully a good monsoon."
The central bank in its annual review was of the opinion that high commodity prices will push inflation to a higher level. It could be around 9% during the first half of the financial year.
Since January 2010, headline inflation has remained above the 8% mark. It touched near 9 % (to be precise 8.98%) in March this year. Economists said that the rise in global commodity prices, especially oil which has crossed USD 110 per barrel on account of political turmoil in Middle East and North Africa, will put increasing pressure on core inflation, which does not factor in food prices.
Therefore, it won't be surprising if we witness a surge in domestic prices in the near future.