Commenting on the persistent rise in food prices over the last few months, Virmani said, “Nobody has an explanation that why after years of almost 3 per cent agriculture growth the prices are high. GDP deflator is 6.2 per cent and the private consumption deflator is higher than that. Inflation is there, and that has to be weighed while making macro-economic policy.”

Apart from food prices, another major concern for the government is the economy’s heavy reliance on imports for crude oil and commodities. “Nearly two-thirds of this rise in inflation (in the second quarter of the last fiscal) was due to three sets of commodities namely, edible oils (including oilseeds and oilcakes), iron and steel (including iron ore) and mineral oils and refinery products,” the report said.

‘Divergent Data worrying’

MUMBAI: Though WPI-based inflation fell to minus 1.3 per cent for the week ended June 20, staying negative for the third week in a row, RBI governor D Subbarao on Thursday said divergences in alternative inflation measures — falling WPI inflation and rising consumer price index (CPI) inflation — complicate the conduct of monetary policy in India. While policy rates have indeed been lowered and bank deposit and lending rates have also come down, albeit not to the same extent, it needs to be recognised that alternative measures of consumer price index (CPI) inflation have continued to rule at elevated levels. ENS