"I am confident that range of inflation would be around 6.5-7.5 per cent throughout the year. I hope if the monsoon is quite good, then it would be possible that this type of pressures would be sorted out," Finance Minister Pranab Mukherjee told reporters here.
The government, he added, would "have to address supply constraints, (and issues concerning) cold chaining and warehousing facilities." The Minister was commenting on the WPI inflation, which inched up to 7.55 per cent in May, from 7.23 per cent in April because of spurt in prices of potato, pulses and wheat, although onion and fruits showed a declining trend.
Overall food inflation rose to 10.74 per cent in May from 10.49 per cent in the previous month. "Some of these food items which are seasonal like pulses, vegetables,... these are the commodities in which prices have increased," Mukherjee said.
He further added that core inflation, which has moved from marginally to 5.74 per cent in May, is continuously coming down from December onwards. It was 8.31 per cent in December 2011.
Manufactured inflation too showed some easing and was 5.02 per cent in May. It was 5.12 per cent in April. Monsoon rains are crucial for agriculture as only 40 per cent of the cultivable area is under irrigation.
The farm sector contributes about only 15 per cent to the GDP, but it employs about 60 per cent of population. On the back of good monsoon in 2010 and 2011, the country harvested a record foodgrains production of 245 million tonnes and 252.56 million tonnes, respectively.