Food inflation worryingly high: Raghuram Rajan

MUMBAI: Describing food inflation as "worryingly high", Reserve Bank Governor Raghuram Rajan today said the price situation will improve once the impact of new crop is felt on the market.

"The new CPI index came in at 10.1 per cent. Food inflation is still worryingly high, and the effects of the harvest are still awaited," he said here.

The retail inflation, as measured by the Consumer Price Index (CPI), was back in double digit in October (latest data) after seven months mainly on account of rising prices of onion, potato and tomato as well as fruits.

Food inflation based on CPI was 12.56 per cent in October.

Rajan, however, took comfort from the fact that core inflation has started showing signs of easing and its impact would be visible on overall inflation.

"But looking through the headline numbers, I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 percent from 8.5 percent in September. The momentum for core inflation is also on the decline," he said.

The Reserve Bank also takes the wholesale price index (WPI) based inflation into account while framing its monetary policy. The WPI data for October will be released tomorrow.

The central bank had last month raised the key policy rate (repo rate) by 0.25 per cent for the second time in a row to rein in inflation.