High domestic food prices are still a cause for concern despite India hugely benefiting from a slump in global oil and commodity prices that pushed inflation into negative zone, the Economic Survey said today.
"The continued food inflation, though moderating of late, could undermine inclusive growth, in particular, the effort to combat poverty," said the pre-Budget Economic Survey tabled in Parliament.
For the week ended June 13 inflation stood at (-)1.14 per cent against (-)1.61 per cent in the previous week.
It, however, warned that some financial investors could be at play behind sharp rise in oil prices despite build up of inventories and forecasts of lower global demand. This along with rise in commodity prices could put strain on the economy.
Domestic food price inflation as measured by the WPI food sub-index, it said, remains much higher than overall inflation.
Food grains, fruit and vegetables, other food articles, sugar and salt being the group which registered two digit inflation from October, 2008 onwards, it said.
In pulses, fruit and vegetables and sugar, the high inflation was prevalent i 2008-09 was in sharp contrast to the negative inflation in 2007-08, it added.
Though volatility is the norms for fruit and vegetables, it said, inflation in milk remained 7-8.5 per cent in 2008-09.