Food inflation has fallen to its lowest in almost six years. Fresh crops poured into marketplaces in mid-December, causing prices of vegetables to ease. Indeed, two staple foods, onions and potatoes, saw their prices fall.
Onions prices fell nearly 60% on a year-on-year basis. And potatoes became some 34% cheaper. As a result, India’s food price index rose just 0.24% in the week to the 17th. In the week before, it had gone up 1.81%.
Food inflation is falling even as wholesale inflation remained above 9% in November. But the drop in food prices could help moderate wider inflationary pressures. The Reserve Bank has hiked rates 13 times since March of last year.
And in more good news for inflation, the rupee fought back on Thursday after early losses. With markets doing badly and month-end oil payments rising, the rupee had fallen during early trade to 53.51.
It rebounded later to finish at 53.08 against the US dollar. The recovery was helped along by PSU banks, which sold dollars during the day. Investors also believe the Reserve Bank intervened on behalf of the currency.
Food inflation nosedives in mid-December; rupee holds its ground amid choppy trade; markets fall for a third day in a row.
And finally, Indian markets fell for a third day in a row, with the Sensex reaching its lowest close in a week. The index tumbled 184 points to 15,544. And the Nifty lost 60 to 4,646. Markets around the world had remained subdued on Thursday. And investors were also worried by the struggles of the rupee.