BUSINESS

Erratic monsoon may lead to price rise: RBI

Source:PTI
August 18, 2009 12:14 IST

The Reserve Bank of India said on Tuesday that prices this year are likely to go up because of the erratic monsoon.

"The expectation is that the erratic monsoon may put pressure on inflation," RBI Deputy Governor K C Chakrabarty told reporters on the sidelines of a meeting of regional rural bank chiefs with Finance Minister Pranab Mukherjee.

Asked whether farm loans would be rescheduled because of the uncertain monsoon this year, he said that is an issue for next year.

According to reports, rainfall in the country between June one and August 12 has been 29 per cent below normal.

The Meteorological Department has officially declared 2009 a drought year.

The deficient rainfall has led to reduction in Kharif sowing, fuelling fears of high food prices in the coming months.

However, inflation for the week ended August 1 dipped to (-) 1.74 per cent, the lowest in three decades, even as prices of essential food items like pulses, cereals, and fruit and vegetables continued to rise.

During the week, the prices of cereals surged by 12 per cent, pulses by 18 per cent, and fruit and vegetables by 18.4 per cent annually.

Source: PTI
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