Finance Minister P Chidambaram has expressed hope that rate of price rise will ease to below 5 per cent following steps taken by the government and the Reserve Bank of India (RBI).
"Several steps, including increase in the policy rate, have been taken and we hope that the WPI-based inflation rate will moderate to a level below 5 per cent," he said at the second South Asian Diaspora Convention in Singapore.
The CPI inflation, measured by movement in the retail prices of food items, soared to a seven-month high of 10.09 per cent in October. The wholesale price-based inflation, too, shot up to 8-month high of 7 per cent in the same month.
The government has taken several measures, including supplying wheat in those location where prices have been high. So far it has offloaded 500,000 tonne wheat to contain prices.
Meanwhile, RBI has raised policy rate by 0.25 per cent in the its October monetary policy review to contain inflation.
Noting that retail inflation has been more intractable, Chidambaram said both the WPI and the CPI are being driven by food inflation.
"The weights of food items in the two indices are 24.3 per cent and 46.2 per cent, respectively. It may surprise you that there is reasonable stability in the prices of major commodities such as wheat and rice," he said, adding that sugar prices have actually fallen by about Rs 6 per kg.
However, the finance minister said, prices of fruit, vegetables, meat, milk and eggs are elevated and are driving the inflation rate.
Chidambaram had earlier said that "both RBI and the government are trying number of measures to cool inflation... We are looking at various suggestion that we have got. I am open to suggestion but I am afraid that there is no easy answers to cool retail inflation."