New Delhi, Jan 14 (Agencies): Adding to the woes of the government, the overall inflation in December shot up to 8.43 per cent mainly due to rising food prices, a development that may prompt the RBI to raise key interest rates later this month to check price rise.

Terming the current rate of inflation as "unacceptably high", Finance Minister Pranab Mukherjee on Friday said he would discuss the issue with state finance ministers on January 19 to take concerted efforts to moderate prices.

The government had on Thursday announced a slew of measures to tame inflation by deciding to continue ban on exports of edible oils, pulses and non-basmati rice and asking states to waive local taxes on essential commodities.

"Whenever the appropriate adjustment of the crucial rates is called for in the larger interest of the economy, including the price stabilistion, the RBI takes appropriate policy in consultation with the government," Mukherjee told reporters.

However, experts doubt the effectiveness of monetary policy to tame high food prices as any such action may impact the growth.

"RBI is expected to raise key short-term rates by 25-50 basis points later this month, has no link with food inflation and is likely to hurt growth," HDFC Chairman Deepak Parekh had said on Thursday.

World Bank Group Preisdent Robert Zoellick, who is in India on a four-day visit, said it (high food inflation) was mainly due to the supply side constraints.

"My own sense in the case of the Indian economy is that some of the inflationary pressures are more likely a function of some of the bottleneck on the supply side than they are from the demand side," he said.

The contribution of food inflation to overall inflation could be gauged from the fact that 'manufactured' inflation, in fact, came down to 4.46 per cent in December from 4.56 per cent in the previous month.

It could also be assessed from the fact that these are mainly vegetable prices which have already risen during the month.

Vegetable prices rose by 22.90 per cent in December versus the previous month. Within vegetables, onions turned expensive by 34.86 per cent and potato by 16.29 per cent.

Food inflation remained high throughout in December and touched 18.32 per cent before coming down to 16.91 per cent for the week ended January one.

"Food inflation at this level is not acceptable and we are trying our best to control it along with the cooperation of state governments," Mukherjee said.