Mumbai: The Reserve Bank on Wedenesday said it is closely watching inflation situation and hoped that proper food management will help in easing of food prices.
"We are watching inflation situation. Food prices have had an effect in the last couple of months," RBI governor Raghuram Rajan said, adding food prices may come down with appropriate food management by the government.
Headline inflation accelerated to five-month high of 6.01 per cent in May from 5. As far as pulses and edible oils are concerned, a line of credit will be extended to the states so that they could quickly import them if they witness any shortages of these essential items. The Centre has advised state governments to crack down on hoarders of essential commodities in anticipation of a weak monsoon. The government will also release more rice into the market to keep a check on its price.
A jump in prices of potatoes and onions last month drove inflation to 6.01 per cent from 5.20 percent in April, contributing to a sell-off in financial markets. Prime Minister Modi, who was elected last month amid widespread anger over rising prices, has made tackling inflation his top priority.
Finance Minister Arun Jaitley asked the states to amend their laws crack down on speculative hoarding in anticipation of a weak monsoon and boost the supply of fruits and vegetables in open markets. New Delhi will also extend a line of credit to state governments to import pulses and edible oil to bridge the shortfall in the domestic market, he said.
