On a day when the government announced one of the biggest increases in the minimum support price of pulses, food inflation rose to 16.74%, pushed by higher prices of fruits, pulses and milk. For long, experts have blamed the relentless increase in minimum support price of major food commodities like wheat, rice and pulses as being one of the main reasons for spiraling food prices.
For the week ended May 29, food prices rose by 0.19 percentage points from 16.55% in the previous week. Prices of pulses shot up by 31%, that of milk by 21.1% and fruits by 18.7%.
The minimum support price of tur, moong and urad was raised by a whopping Rs 700, Rs 410 and Rs 380 per quintal. It also announced an additional incentive of Rs 5 per kg for procurement agencies. Meanwhile, price of consumer staples, such as rice and wheat, turned costlier by 7% and 3%, respectively. However, prices of potatoes and onions eased by 30.87% and 12.27%, respectively.
Some experts believe RBI may take steps to control money supply in a bid to cool inflation, which has remained at an elevated level despite moderation from 20% in December.
The central bank is scheduled to announce its first quarter review of monetary policy on July 27. The RBI may also tighten monetary policy in the quarterly review next month, said Crisil chief economist DK Joshi. ?Food inflation would remain range-bound until next harvest season as there has been no sustained decline in food items. Once monsoon arrives, cereal prices may see a decline,? he said.