'Rise in food inflation on predicted lines'

Inflation continues to be concern in the medium-term and the double-digit food inflation numbers (11.4 per cent) released on Thursday were on predicted lines as a result of the base effect coming into play, a senior government official said.

"Inflation situation in the medium-term remains something of a concern but today it is not something which shows that the situation has got worse," chief economic advisor, Kaushik Basu, told reporters after the Reserve Bank of India's Board meeting held here on Thursday.

After a fortnight of being in single digits, food inflation for the week ended July 31 shot up to 11.4 per cent from 9.53 per cent the week earlier on the back of a spike in prices of cereals, milk and fruits.

"I just want to clarify this was entirely predictable. It has nothing to do with the Food Price Index which has actually fallen slightly.

"Exactly one year ago, there was a sharp drop in FPI," Basu said. He, however, declined to comment on the decline in industrial growth to 7.1 per cent from 8.3 per cent.