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Food inflation could come down soon, says Ahluwalia

December 25, 2010 - New Delhi

Planning Commission Deputy Chairman Montek Singh Ahluwalia has said the prices of onions have started reducing, and the food inflation rate would follow the suit.

Ahluwalia said the sudden hike in onion prices had caused grave concern to people, but now it has started to decrease.

"It's quite clear that it is a very unusual increase in onion prices but I think it already has come down. You know, sometimes, this thing does happen. We have not expected it and it does create a bit of problem in the short run. But I don't think it's going to affect the basic medium run accessibility that inflation will soon come down again," he told reporters on Friday on the sidelines of a seminar here.

Ahluwalia further announced that the agriculture production of the country is good this year, which would resolve many issues.

"It's extremely important to have a very strong positive response on the supply side in agriculture. That is actually the government's policy, and I think this year agriculture production is very good. What we have seen is extremely an unusual spike in the price of one product, which has began to come down," said Ahluwalia.

"So, I know it sounds difficult when the spike is still happening, but I am quite clear that this should not be seen as something that is affecting the medium term projection of the next few months," he added.

Following the crackdown by the government and imposition of restrictions on export, the retail and wholesale prices of onion started cooling in various markets across the country.

The prices of onion dropped to Rs. 50-60 a kg in Delhi, Mumbai, Chennai and Kolkata on Friday from Thursday's level of Rs. 60-70 a kg.

Onion prices had doubled to Rs. 70-85 a kg in major cities across the country earlier this week due to damage of crops in Maharashtra, Gujarat and Karnataka because of rains as well as hoarding.


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