Pranab Mukherjee hints at more steps after inflation touches 10 week high

Expressing concern over food inflation rising to a 10 week high of 14.44%, finance minister Pranab Mukherjee on Thursday indicated the government will take more steps to check rising prices.

"We are looking into it. So far as onion is concerned we have taken care of it... but the fluctuation in milk, fruit, vegetables and certain commodities have contributed to the inflation," he told reporters  in New Delhi.

Pointing out that the rise was not because of the base effect, he said the price rise was real.

"This is an area of concern... earlier we thought that it is because of the base effect but it is not merely the base effect. There has been real increase in the prices of certain food items," he said.

Continuing its rise for the fifth consecutive week, food inflation rose to a 10-week high of 14.44% for the week ended December 18 as prices of vegetables, fruits and protein-based products continued to escalate.

"We are waiting for the full monthly figure. Weekly variations are there. Whether these are corrected in the coming week that is to be seen," Mukherjee said.  Food articles contribute about 14% in the wholesale price index.

While the government is concerned over the rising food prices, Mukherjee expressed hope that the overall inflation for the financial year would be around 6.5%.

"I am still holding that year-end inflation may be around 6.5%," he said.

Mukherjee's estimates of year end inflation, however, is higher than  5.5% indicated by Prime Minister Manmohan Singh earlier this month.

On an annual basis, onions became costlier by 39.66%, whereas on a week-on-week basis, the increase was 3.49%.

The rate of price rise of vegetables was 29.26% on an annual basis, while on a weekly basis, it was 4.58%.

Fruits became 21.97% more expensive, while milk was 17.75% costlier on a year-on-year basis during the week under review.

Similarly, egg, meat and fish prices rose by 20.34% on an annual basis.