MUMBAI: Rising food prices in India, where inflation rose to 7.55 percent last month, can be addressed by ensuring supply rather than monetary tightening, Finance Minister Pranab Mukherjee said on Saturday.
"We need to take necessary steps by removing supply constraints. Inflation arising out of agriculture products need not necessarily be controlled through money supply or tightening monetary policy," he told a seminar. "Supply constraints have to be removed, which we are doing."
Inflation has made it harder for the central bank to revive economic growth with a widely expected interest rate cut next week.
Mukherjee said food inflation had not been controlled because demand for vegetables, fruit, milk and eggs had increased.
"I'm confident, keeping in view all these factors, RBI will adjust monetary policy as we are adjusting our fiscal policy," said Mukherjee, who on Friday was nominated as a presidential candidate for the ruling United Progressive Alliance coalition in next month's election.
A political logjam in New Delhi and the eurozone debt crisis are weighing on India's economy. Growth slumped to a nine-year low of 5.3 percent in the first quarter of 2012.
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