Finance Minister P Chidambaram expressed happiness on Friday over the fall in inflation to a 16-month low, but said prices of essential food items should decline further.
"It is a cause for happiness. It is a cause for concern," Chidambaram said when about decline in inflation to 3.79 per cent for the week ended August 25.
"This shows good macro management. I have been saying whatever steps have been taken from time to time have yielded good dividends," he said.
Asked about the possible future trend on inflation, he said there was need for caution as international crude oil prices have reached 74 dollars per barrel.
"Since crude oil prices are at $74 per barrel... so the outlook is of caution," he told reporters.
Chidambaram also said that prices of essential commodities could only come down if supplies were augmented.
"That can only happen if the demand-supply mismatch is addressed. We have to address the supply side issues of pulses, food, oilseed, and vegetables," he said.
"Ultimately, the homemaker's concerns about prices of essential commodities needs to be addressed," he added.
Cheaper food products such as wheat, fruits, vegetables and maize, besides some manufactured items dragged wholesale prices index-based inflation to 3.79 per cent. Inflation has remained below four per cent for the second week in a row and is much lower than 5.27 per cent in the corresponding week of last year.
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