I have been advised that inflation has got entrenched and monetary policy does not have or has very little impact on food prices and fuel prices, he said, adding that demand for protein-based items and fruits and vegetables is high.
The retail inflation, based on Consumer Price Index (CPI), swelled to 10.09% in October, mainly on account of high food prices. The Reserve Bank has hiked policy interest rate by 0.25% each in September and October to bring down the stubbornly high inflation.
There is no easy solution to taming food inflation... There are no quick fixes for taming the problem. I am afraid it will take some time to contain this inflation. We are paying a political price for that and I acknowledge that, but those are the facts, Chidambaram said at the India Economic Conclave here.
He said retail inflation is high mainly because of food and fuel prices, and monetary policy cant deal with curbing these prices.
Demand is being stoked by the fact that we have high fiscal deficit and that fiscal deficit was not contained for a fairly long period, I think over a period of two years, Chidambaram said.
The Wholesale Price Index (WPI)-based inflation stood at an 8-month high of 7% in October. The rate of price rise in food articles was at 18.19%.