Food prices not to come down despite CRR hike: Assocham

New Delhi, Apr 18 (UNI) Despite the Reserve Bank's move of hiking the cash reserve ratio (CRR), the food prices will not come down to a tolerable level, according to an industry body.

The RBI's monetary measures might bring down the resilience building up in certain manufactured products, but the food prices are not directly related to the money supply. In view of the global supply crunch in food commodities, money tightening by the central bank would not be of much help in breaking the spiralling prices of food items, industry chamber Assocham said in a statement.

''At present, the nature of inflation in the economy is supply-side driven. The monetary tightening measures by the regulator would rather hurt the other economic segments like real estates, consumer durables and automobiles,'' Assocham President Venugopal N Dhoot said.

The Chamber has asked its members to extend full support to the government in its drive to curb inflation.

The RBI has raised its CRR by 50 basis points to eight per cent in two stages, with the first 25-bps rise coming into effect on April 26 and the second on May 10.

This hike in CRR is applicable to scheduled commercial banks, regional rural banks (RRBs), scheduled state co-operative banks and scheduled primary (urban) co-operative banks.

UNI PDT SR PM1801