Food inflation falls to 8.06%

Food inflation falls to 8.06%

New Delhi: Food inflation fell to 8.06% for the week ended 21 May on the back of cheaper pulses, wheat and some vegetables, with the latest numbers likely to be seen by the government as a silver lining after the slowdown in economic growth during the first quarter.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8.55% during the previous week. The rate of price rise of food items was as high as 21.15% in the third week of May, 2010.

As per data released by government on Thursday, prices of pulses were down by 9.22% year-on-year, while wheat became cheaper by 0.77%.

This seems to be a reflection of the record production of wheat and pulses during the 2010-11 crop year (July-June).

During the week under review, prices of vegetables overall were down by 1.06% on an annual basis, while potatoes became cheaper by 2.15%.

However, prices of other food items became more expensive. Fruits were up by 30.51% and onions by 12.32% year-on-year.

Protein-based item also continued on their recent upward trend, with milk prices becoming dearer by 7.04% and eggs, meat and fish becoming 5.50% costlier.

Cereals became dearer by 4.78%, with prices of rice going up by 2.51%.

Overall, primary articles prices registered 10.87% inflation during the week under review, compared to 11.60% in the previous week.

Meanwhile, non-food primary articles inflation went down to 21.31% for the week ended 21 May from 23.22% in the previous week.

Fibres became dearer by 55.82% and minerals by 11.78%.

The recent hike in retail prices of petrol was also reflected in the data. Petrol was up 32.41% year-on-year. Inflation in petrol had stood consistent at 21.81% during the previous few weeks.

The government and Reserve Bank of India had said that in the months to come, inflationary pressure would be more from core (non-food) items on account of high global prices of commodities, particularly crude.

A rise in prices of food items was the main reason for inflationary pressure during 2010. Food inflation was in double digits for most of last year, before showing signs of moderation from March this year.

Food inflation fell to an 18-month low of 7.47% in the first week of May, before rising again in the second week.

Headline inflation stood at 8.66% in April. The RBI, in its monetary policy for 2011-12, had projected that overall inflation would average 9% during the first half of this fiscal.

The latest drop in food inflation numbers comes in the wake of a slew of bad news for the economy. GDP growth of the country slowed to a five-quarter low of 7.8% during the January-March quarter, while the six core industries registered meagre 5.2% expansion in April.

Experts had blamed inflation and the resultant rate hikes by the RBI, which resulted in slowing down of investment, for the poor economic growth numbers.