Mumbai: The government will sell its surplus stocks of wheat and rice in the open market to check rising prices of foodgrains and tame inflation. The decision was taken at a meeting of the cabinet committee on economic affairs (CCEA) presided over by prime minister Manmohan Singh.

The move follows a spike in inflation, which touched 12.44 per cent in the first week of August.

Food Corporation of India (FCI) will sell foodgrains directly to bulk buyers through open tender and state governments will undertake the distribution to retail consumers.

The government has also appointed a committee of secretaries to recommend the quantity and timing for open market operation to the ministry of consumer affairs and food and public distribution.

The government had procured a record 22 million tonnes of foodgrains following a record food grains production of around 230 million tonnes in 2007-08.

While there is enough stocks for normal operations of the public distribution system, the government will have to ensure that the open market operations did not affect buffer stock requirements.

In a move to check hoarding of essential commodities by traders, the centre also extended the powers of state governments to regulate foodgrain stocks with traders till April 2009.

''For keeping a check on prices and in the interest of farmers, the government has decided to extend the notification for imposition of stock limits on rice, wheat, pulses and edible oils till April 30, 2009," information and broadcasting minister P R Dasmunsi said here after the cabinet meeting.

He said paddy has been added to the list of items to be kept under the stock limit.