Food Prices Could Fall from January: Montek

Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that food prices which are presently at 10-year high will start coming down from next month.

Ahluwalia said that there is dysfunction in distribution as the situation suggests, for it’s retail prices that rose, not wholesale prices and that import cannot be done without subsidy as international prices are higher.

“It’s a complex situation and cannot be corrected with monetary polices … prices built up is on speculation post drought. Stocks of cereals are adequate and prices can be moderated and it will be from January,” he said.

He noted that hike in food prices was a matter of grave concern. “There were some increased expectations but for some products like vegetables the increase is excessive,” he said.

It may be mentioned that food inflation climbed to a 10-year high of close to 20 per cent during the first week of December, driven mainly by higher prices of potato, other vegetables and pulses.

Prime Minister Economic Advisory Council Chairman C Rangarajan had said that the Reserve Bank could reduce money supply and raise interest rate to tame the rising prices of food articles.