Food price inflation seen easing in 2 weeks

Food price inflation seen easing in 2 weeks

New Delhi: India’s food inflation will substantially ease in next two weeks, but non-food inflation is accelerating, Kaushik Basu, chief economic adviser at the finance ministry, said on Friday.

India’s food inflation edged up to 12.81% in the year to 3 July from 12.63% in the previous week, snapping a two-week easing trend, on higher rice and wheat prices, data showed on Thursday.

“It is reasonable to predict that the food price inflation that will be announced 2 weeks from now, that is, on Thursday, 29th July, will be substantially lower than what the inflation is right now," Basu said.

The government, facing political protest against soaring prices, has been pinning its hopes on good summer rains to cool down food prices, which will help ease the double-digit headline inflation.

But the weather office on Thursday said monsoon rains were 24% below normal in the past week and unlikely to rebound in the week ahead, raising fears of crop loss.

Earlier on Friday, agriculture minister Sharad Pawar said weak monsoon rains in the past week will not significantly hurt crop output in the country and the weather outlook was encouraging.

India’s headline inflation quickened to 10.55% in June, holding in double digits for the fifth straight month and cementing expectations the Reserve Bank of India (RBI) will raise interest rates for a second time this month to contain surging prices.

The RBI, which surprised markets earlier this month by lifting policy rates by a quarter point in its third hike so far this year, is expected to raise rates by another 25 basis points at a policy review on 27 July.