India’s food price inflation accelerated for a fourth straight week, fuelled by costlier potatoes and pulses, adding pressure on finance minister Pranab Mukherjee to maintain tax-free imports of crude edible oil and wheat.
An index measuring wholesale prices of lentils, rice, vegetables and other food articles compiled by the commerce ministry increased to 17.94% in the week to 30 January from a year earlier after touching 17.56% the previous week, according to a statement.
Mukherjee may keep import tax on wheat, pulses and other food items at near zero in the Budget on 26 February to boost supplies, analysts said.
The biggest challenge for policymakers is to slow inflation to an acceptable level of 4-5%, C. Rangarajan, economic adviser to Prime Minister Manmohan Singh, said this week.
Graphic: Yogesh Kumar/Mint; Photo: AFP
“Curbing food inflation will be high on the agenda in the Budget,” said Shubhada Rao, chief economist at Yes Bank Ltd in Mumbai. “They may also partially roll back excise duties to tone down demand to more realistic levels.”
India is using every option to curb food prices, which have stayed in double digits since June. On 13 January, the Centre unveiled plans to sell 2-3 mt of wheat and rice in the open market for two months. It also announced permitting duty-free import of white sugar until 31 December.
The benchmark wholesale price inflation rate accelerated to 7.31% in December, the highest in 13 months, stoked by agriculture products.