New Delhi: India’s food inflation accelerated to a nine-month high in late October, driven mainly by costlier protein items, belying hopes of a respite in overall price pressures in the near term.
The food price index rose an annual 12.21% in the week to 22 October, its highest since the week ended 29 January, as prices of milk, eggs, meat and fish jumped, government data on Thursday showed.
The data reflects changing diets in one of the world’s fastest growing markets, where an urban middle class is consuming more high-value and high-protein foods.
“The spike in current week data is primarily on account of higher food article prices, resulting from protein rich and vegetable items,” said Shakti Satapathy, a fixed income strategist with A. K. Capital.
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“Though the festive demand could have contributed to this week’s data, the supply issue in the above mentioned items can’t be ruled out.”
Experts believe India needs to reassess the way agriculture is being practiced in the country in the face of changing lifestyle and invest in new crops and agricultural innovation.
India’s benchmark 10-year bond yield briefly rose 1 basis point to 8.91% immediately after the data, while shares extended losses to 0.85%.
Finance minister pranab mukherjee said inflation remains a “grave concern” after the data.
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The Reserve Bank of India (RBI) has raised interest rates 13 times since March 2010 in its bid to control inflation, which has topped 9% for nearly a year.
Last week, it had signalled a pause in its tightening cycle hoping prices pressures would begin to abate starting December. But rising food prices could upset those calculations.
“The food inflation is once again a renewed concern, and the food and fuel component do seem to put inflation expectation once again on the uptick,” said Shubhada Rao, chief economist, Yes Bank.
“While it is early to say what RBI would think in terms of a December rate action, but quite clearly this is not a comforting news at all as far as following the monetary guidance is concerned.”
The fuel price index, meanwhile, climbed an annual 14.50% in the week to 22 October compared with an annual rise of 14.70% last week.