In order to rein in prices, Jaitley said most of the state ministers suggested that the Centre should help them in augmenting storage facility.
"Some states suggested a price stabilisation fund. In case if prices in certain commodities go up, there could be market intervention," he said.
The meeting was also attended by Food Minister Ram Vilas Paswan and Agriculture Minister Radha Mohan Singh. Noting that the current price rise is a temporary phenomena created by hoarders, Paswan asked the state governments to enforce the Essential Commodities Act effectively.
Earlier addressing the meeting, Jaitley said: "There are reports of below normal monsoon this year. Hoarders are taking advantage of the situation."
"When production of food items is higher than last year and still prices rise, then it means that intermediaries are keeping the stock somewhere," he added.
He said the test of good governance is how to de-hoard the stock kept by intermediaries into the market to rein in prices. "This is the biggest challenge."
"Prices of some items had touched Rs 70-100 per kg last year. Prices are still lower this year. There is no panic situation," he said.
The Finance Minister asked the state governments to assess the problem as action taken after price rise creates panic in the market.
"There should be collaborative efforts from both Centre and states so that price situation does not go out of control," Jaitley said, adding, "states are equally anxious and they do not want prices to rise."
In order to check prices during the coming festival season, Jaitley urged the states to assess the supply-demand situation and take effective measures in advance to boost supply.
The Finance Minister highlighted measures taken by the Centre in the last few weeks including additional allocation of 5 million tonnes of rice for poor and imposition of minimum export price on onion and potato.
Noting that prices of crude oil have increased due to tension in Iraq, Jaitley said there are, however, indications of softening of prices.