News on inflation, IIP good; no need for over-reaction: Pranab Mukherjee

Expressing satisfaction at the decline in food inflation and turnaround in industrial growth, finance minister Pranab Mukherjee today said one should not "over-react" on such weekly and monthly developments.
   
Food inflation for the week ended April 30 dropped to a 18-month low of 7.7%, while after four months of slow growth the industrial production expanded by 7.3% in March.
   
"The good news is that we have got today both on the prices front and on industrial production must not be over-interpreted, just as we must not get overly pessimistic when the economy does badly during a week or month," he said in a statement.
   
Mukherjee said that these weekly and monthly cycles of "bad and good news must be treated without over reaction". The food inflation data is released on weekly basis, while the Index of Industrial Production (IIP) is a monthly data.
    
The decline in food inflation is being attributed to drop in prices of cereals and vegetables, especially potatoes.
   
"We hope to see further moderation in food inflation in the coming weeks," Mukherjee told reporters earlier in the day.
    
However, the Minister said, "There are concerns on the price momentum in non-food articles. Sustained high non-food primary prices are creating cost-push inflationary conditions in the manufacturing sector".
    
On the IIP for March, he said there is revival in the manufacturing sector. The sector with a weight of almost 80% in the IIP grew by 7.9%.
    
Mukherjee said there is also a revival in the growth of capital goods with the Index recording a growth of 12.9% after 3 months of negative growth.
    
He, however expressed disappointment over the decline in industrial production in 2010-11 over the year-ago period. The growth of industrial production in 2010-11 declined to 7.8% from 10.5% in the previous fiscal.