The Centre expects headline inflation to ease from current levels and enter a comfort zone of 5-6% by December, Prime Minister Manmohan Singh said on Monday. Addressing a conference marking the first anniversary of the UPA-II in the capital Singh added that, ?a permanent mechanism to monitor the inflationary tendencies in the country will be put in place in coordination with the state governments.?
With accelerated pace in rise of food and fuel prices, spilling into core inflation, the headline inflation was at 9.58% in April. The government?s attempts to keep a check on food price inflation?which has been in double digit territory for more than 18 months?has not been fruitful so far. The latest weekly inflation numbers saw food inflation inching up for the second straight week to touch 16.49%.
The PM admitted that the price rise has been a concern, and pointed out that it is largely a phenomenon of the ?one to two years?. ?Drought and floods in some parts of the country were largely responsible for high food inflation,? he said. Worst monsoon rains in more that 37 years adversely affected India?s summer crops last year and pushed the food price inflation above 20% last year.
Hike in key policy rates by the central bank in the recent months and normal monsoon rains are expected to help government?s attempts to bring down inflation by December.