Inflation remained a big challenge for govt, RBI in 2013

A surge in food prices ripped common man's pockets as the United Progressive Alliance government paid for its failure in the assembly polls in four states and may feel the heat in next year's general elections as well if it is not controlled.

Prices of kitchen essentials such as onions spiked to a record Rs 100 per kg and tomatoes touched Rs 80 in some states during the year, pushing the food inflation to double digit mark, even as the Reserve Bank tried in vain to contain the price rise.

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The retail inflation, which is a better gauge of price rise and measured by Consumer price index, ruled in double digit for most months of the year with the latest November figures coming in at 11.24 per cent.

While the Reserve Bank on its part has been trying to tame the price rise by hiking key lending rates, there hasn't been much impact as the inflation seems to be entrenched.

"There is no easy solution to taming food inflation.

“There are no quick fixes for taming inflation. I am afraid it will take some time to contain this inflation.

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“We are paying a political price for that and I acknowledge that but those are the facts," Chidambaram had said.

The wholesale price based inflation rose to 7.52 per cent in November, the highest level seen in 14 months.

This is much higher than the March-end inflation projection of the RBI at 5.5 per cent and also higher than central bank's comfort level of 4-5 per cent.

The government's effort to cool prices did not yield results as vegetables, especially onion, remained expensive through out the year.

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Price rise in onion stood at 190 per cent in November, which raised the vegetable basket inflation to 95.25 per cent.

With price rise affecting the common people, the Congress lost the assembly elections in Delhi, Madhya Pradesh, Rajasthan and Chhattisgarh.

Party President Sonia Gandhi referred to price rise as one of the factors for the defeat.

The country is set to go to polls by May 2014 and high inflation and costlier food items may pose a big challenge for the UPA government while making efforts to regain power for the third consecutive term.