Food prices likely to soften in the coming months: Assocham

PTI Posted online: Wednesday, Sep 18, 2013 at 0000 hrs
New Delhi : Industry body Assocham on Wednesday said food prices are likely to ease in the coming months on account of good monsoons and the influx of Kharif crop.

The assertion assumes significance as it comes at a time when food prices have soared and are pinching the pocket of most Indians.

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"We believe that food inflation pressures are likely to soften in the coming months on accord of good monsoons and arrival of the Kharif crop," Assocham President Rana Kapoor said.

Costlier onion and other vegetables pushed up inflation for the third month in a row to 6.1 per cent in August, making it difficult for the RBI to cut rate in the monetary policy review due later this week.

Costlier onion, other food items push headline inflation to 6.1% in August

Besides, with the August wholesale price inflation being driven by a jump in food prices, Kapoor said the government must take measures to augment investment in the agriculture sector to improve supply chains, warehousing and other related infrastructure.

The investment in supply chains must be coupled with a renewed thrust on horticulture products, improvement in irrigational facilities to reduce dependence on monsoon and insurance schemes for agri sector, Assocham said.

"This (investment in agriculture) will ensure adequate supplies of essential items at reasonable prices to consumers, since food inflation acts as an inequitable tax on the poor and the Government has to strive to abate prices pressures in the category," Kapoor said.

With the Rupee gradually gaining back lost ground, pressure from currency depreciation on headline inflation will ease going forward. However, risks to fuel inflation remain on the upside, as a sharp adjustment in diesel prices is expected this month, he added.

The price of vegetables in general rose by 77.81 per cent making life difficult for the common man.

The food items became costlier by 18.8 per cent on year on year basis.