The rate of "3.32 per cent is perfectly acceptable, tolerable. But one component of WPI - primary articles' inflation is 7.5 per cent. Within primary articles, food is 5.8 per cent. This is a worrying inflation," he said during an interaction with Wharton Business School students.
Inflation based on wholesale price index fell to 3.32 per cent for the week ended September 8, the lowest since December 2002. The ruling UPA coalition has been trying to curb prices after headline inflation touched 6.69 per cent in January.
Primary articles, comprising farm products, have a weight of 22 per cent in wholesale price index. According to official estimates released last week, although the overall rate fell, the index for primary items rose. A week earlier fruit prices had surged 17.7 per cent.
India is the world's second-fastest growing major economy and the rapid expansion is fueling demand, forcing the government and the central bank to take steps to tighten money supply and augment availability of food items.
India is importing wheat, pulses and edible oils, reduced customs duty, banned export of some other products and even suspended futures trading in rice, wheat and some pulses.
Chidambaram said rising prices of primary food articles was worrying him. High food prices the world over and a supply-demand mismatch were behind the high prices, he said, adding this was beyond the influence of the monetary policy.
"Monetary policy will have effect only on core inflation minus food. We are trying to mitigate this by importing wheat and pulses," he said.