India’s food inflation has fallen to its lowest in more than three years. The food price index dropped to 6.6% in the period to 26 November. In the previous week it stood at 8%.
A drastic 4% fall in potato prices contributed to the latest decline. Prices of meat and eggs also dropped 1% during the period. But the easing in food inflation is also seasonal. This is a time of the year in which new crops pour into markets.
One factor that could spike up overall inflation again is the weakening of the rupee. But on Thursday, RBI governor D Subbarao said some decline in the rupee had already been factored into the 7% estimate for headline inflation the end of the fiscal year.
RBI has increased policy rates 13 times since March 2010 in its efforts to fight inflation.
Meanwhile, finance minister Pranab Mukherjee has said the global slowdown has affected foreign direct investments in India. He added that India would not remain unaffected by the euro zone crisis.
And finally, Indian markets plummeted on Thursday, with the Sensex registering its biggest fall in three weeks.
Poor sentiment at home and the continuing euro zone crisis took their toll. The Sensex nosedived 389 points to 16,488. And the Nifty dropped 119 to 4,944.