Inflation will moderate in the coming months but the country would need to bridge the demand- supply gap of essential food items to keep prices under check in the long run, said Economic Affairs Secretary ArvindMayaram.
“Inflation will be a problem. We believe inflation in immediate future will come down marginally, but in the long run if we need to go down to the low single digit inflation numbers, we will have to continue to work towards increasing production and improving the logistics for movement of vegetables,” he said.
WPI inflation rose to a 14-month high of 7.52 percent, while the retail inflation was in double digits at 11.24 percent in November. The rise in inflation can be attributed mainly to price rise in vegetables and protein-rich items.
“There is in-elasticity of demand in terms of price as far as food is concerned,” he said adding there was an urgent need to amend the Agricultural Produce Market Committee (APMC) Act.
He said the APMC Act is “now beginning to hurt” by restricting movement and dissemination of food and cereals. The food distribution needs to be more open and market oriented, he said.
Citing statistics, Mayaram said spurt in demand for food products, driven by improvement in living standards, is also adding to inflationary pressure.
Giving example of egg consumption, he said it has increased from 18 per person per annum in 1993-94 to 33 eggs per person in 20 years time.
“It also indicates that there is now a supply demand gap which needs to be met and therefore a large number of steps have been taken by the government.
“Of course there is a lag, we will see its reflection in next 2-4 years but we will have to continue to work towards increasing the production and creating the right kind of agri infrastructure for the movement of fruits, vegetables and eggs,” Mayaram said.