Food inflation at 7.47% on 7 May

Food inflation at 7.47% on 7 May

New Delhi: India’s food price index rose 7.47% and the fuel price index climbed 12.11% in the year to 7 May, government data showed on Thursday.

In the previous week, annual food and fuel inflation stood at 7.70% and 12.25% respectively, the slowest rise in food prices since end-March 2009.

The primary articles price index was up 10.94%, compared with an annual rise of 11.96% a week earlier.

India’s weekly food inflation readings have slowed from the double-digit growth notched for much of 2010, but headline inflation, at 8.66% in April, remains considerably above the central bank’s comfort level.

Wholesale price inflation, the main gauge of prices in India, has been stubbornly high for months and the prospect of higher energy prices will keep pressure on the Reserve Bank of India (RBI) to raise interest rates in June and maintain a hawkish stance.

Forecasters have predicted normal monsoon rains this year which should benefit farm output, helping rein in food prices. However, a hike in gasoline prices by state-run refiners last weekend and a possible revision in prices of subsidized fuel could fan fuel inflation in the coming weeks.

The RBI raised interest rates in early May -- its ninth rate hike since March 2010 -- by a sharper-than-expected 50 basis points and said fighting inflation was its priority, even at the expense of short-term growth.