Indore, Jan 08 (Agencies): Reserve Bank of India Deputy Governor Subir Gokarn on Saturday said food inflation has become "worriedly higher" because of the rapid rise in prices of protein items.

"The new WPI has higher weight for protein sources, reflecting changing consumption patterns," Gokarn said addressing a seminar on data and RBI decision making process here. "Because prices of these items are rising steadily, food inflation level has been worriedly higher despite good monsoon."

According to the latest data released by the commerce and industry ministry, food articles inflation rose to 18.32% from 14.44%, lifting India's primary articles inflation for the week ended Dec 25 to a seven-month high at 20.20%.

Consumer price inflation presented a relatively optimistic picture, Gokarn said.

"CPI basket still gives pre-dominant weight to cereals reflecting consumption patterns many years ago. Because cereal prices have been favourably impacted due to good monsoons, the overall inflation measured by CPI presents a relatively more optimistic picture."

"The (CPI) numbers are still high but declining rapidly," he added.

India's annual inflation rate based on the Consumer Price Index for Industrial Workers fell to a 20-month low of 8.33% in November from 9.70% a month ago.

Gokarn said the lag in numerous data, which is released in India, was posing a challenge to RBI's decision-making process.

He said in the monetary policy context, the most current data used by RBI was the index of industrial production, which comes out with a lag of six weeks and is subject to revision after two months.

"Policy decisions are made within the confines of lagged information flow," he said.
He said RBI decision-making based on lagged data is akin to an odometer of car, which gives the speed after a gap of 20 minutes.

Gokarn also said there is scope for reducing the lag and the magnitude of revisions in data.