Inflation based on WPI fell to 3.32% for the week ended September 8, the lowest since December 2002. The ruling UPA coalition has been trying to curb prices after inflation touched 6.69% in January. Primary articles have a weight of 22% in WPI. According to official estimates released last week, although the overall rate fell, the index for primary items rose. A week earlier fruit prices had surged 17.7%. India is the world's second-fastest growing major economy and the rapid expansion is fuelling demand, forcing the government and the central bank to take steps to tighten money supply and augment availability of food items. India is importing wheat, pulses and edible oils, reduced customs duty, banned export of some other products and even suspended futures trading in rice, wheat and some pulses.
Chidambaram said rising prices of primary food articles was worrying him. Monetary policy will have effect only on core inflation minus food. We are trying to mitigate this by importing wheat and pulses.