The government on Saturday said the current inflationary pressure is a matter of “grave concern” and termed the rising fuel prices and vagaries of Indian monsoon as challenges.

“...of course monsoon is perennially a challenging kind of thing but the fuel prices is a big challenge. We hope that will come down in due course of time... and as far as food structural factors (are concerned) inflation going up is an area which is a grave concern,” said Mr R Gopalan, Union Secretary, Department of Economic Affairs.

Inflation was 8.31 per cent in February this year, the latest data currently available. Food inflation has also been in the double-digits for most of last year.

The Reserve Bank has already revised its inflation projection for March-end, 2011, to 8 per cent from the earlier 7 per cent.

The apex bank has hiked its key-policy rates eight times since March 2010 to tighten liquidity supply as a means to curb inflation.

Multi-lateral agency ADB had earlier this month projected inflation to be around 7.8 per cent in 2011-12, much above the Government’s comfort zone of around 5 per cent.

Mr Gopalan said inflation is still not in acceptable levels though it is going down.

While food items, which make up around 15 per cent of the overall Wholesale Price Index (WPI) basket, were the major contributors of the inflationary pressure for some time, rising crude prices have now put renewed anxieties.

The DEA Secretary also said that work has started on guidelines for an infrastructure debt fund to help the core sector meet its financing requirement which has been pegged at $1 trillion during the 12th Plan period (2012—17).

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