Food inflation to drop in coming months: CACP chairman

Written by Press Trust of India | Mumbai | Updated: Dec 23 2013, 03:27am hrs
Food inflationCPI is likely to ease on the back of an expected drop in food prices in coming months (Reuters)
After touching a high of 11.24 per cent in November, Consumer Price Inflation (CPI) is likely to ease on the back of an expected drop in food prices in coming months, Chairperson of Commission for Agricultural Costs and Prices (CACP), Ashok Gulati, said today.

"Vegetable prices will definitely come down... Wheat and rice (prices) can come down if the government releases stocks.

"International prices are moderating. So, there are very good chances that inflation can come down provided we don't pump in more liquidity into the system," Gulati said on the sidelines of the silver jubilee celebrations of the Indira Gandhi Institute of Development Research here.

Notably, while wholesale price based inflation (WPI) accelerated to a 14-month high of 7.52 per cent in November, retail inflation quickened to a high of 11.24 per cent during the month, mainly on the back of high food prices.

Stressing on the need for setting up sophisticated cold storages in the country, Gulati said that most of the present cold storages were designed only for holding potatoes.

He said that processed foods should be encouraged as that would help the farmers and consumers. Gulati also made a pitch for free trade in vegetables with no export controls.

"We need to reduce the duties and allow free trade at least for vegetables. Exports should be allowed... If there is an abnormal situation, you put an export duty rather than putting a ban," he said.

Asked about the huge stocks of cereals on the one hand even as the prices of these commodities keep rising, Gulati said, "government should liquidate 20 million tonnes of wheat and rice", as that would help contain their rates.