Food inflation moderates to 8% for week ended Nov 19

New Delhi, Dec 1: Food inflation witnessed a sharp moderation to 8 percent for the week ended November 19, though prices of most agricultural items, barring potatoes, onions and wheat, continued to rise on an annual basis.

Food inflation, as measured by the Wholesale Price Index (WPI), was 9.01 percent in the previous week ended November 12. It stood at 9.03 percent in the corresponding week of the previous year.

According to data released by the government on Thursday, onions became cheaper by 40.65 percent year-on-year during the week under review, while potato prices were down by 10.98 percent. Price of wheat also fell by 4.71 percent.

However, all other food items grew more expensive on an annual basis.

Pulses became 13.80 percent costlier during the week ended November 19, while milk grew dearer by 11.41 percent and eggs, meat and fish by 13.55 percent.

Vegetable prices were up by 5.13 percent year-on-year.

However, this marked a substantial slowdown in the inflation rate in comparison to the past few months, when prices of vegetables had witnessed double-digit growth.

Fruits also became 7.98 percent more expensive on an annual basis, while cereal prices were up 1.97 percent.

Inflation in the overall primary articles category stood at 7.74 percent during the week ended November 19, as against 9.08 percent in the previous week. Primary articles have over 20 percent weight in the wholesale price index.

Inflation in non-food articles, which includes fibres, oilseeds and minerals, was recorded at 2.14 percent during the week under review, as against 4.05 percent in the week ended November 12.

The rate of price rise in non-food primary articles has fallen sharply during the past couple of months, from over 8 percent to nearly 2 per cent in the week ended November 19.

Fuel and power inflation stood at 15.53 percent during the week under review, compared to 15.49 percent in the previous week.

The decline in the rate of price rise in food items is likely to bring some relief to the government and the Reserve Bank, which have been facing flak from all quarters for persistently high prices.

It also comes as a silver lining at a time when economic growth fell to 6.9 percent in the second quarter, the lowest in over two years.

The eight key infrastructure industries witnessed dismal growth of 0.1 percent in October, the lowest in the past five years.

The government had said steps were being taken to remove supply bottlenecks and expected prices to ease from December.

Headline inflation, which also factors in manufactured items, has been above the 9 percent-mark since December, 2010. It stood at 9.73 percent in October this year.

The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation.

In its second quarterly review of the monetary policy last month, the central bank had said it expected inflation to remain elevated till December on account of the demand-supply mismatch, before moderating to 7 percent by March, 2012.

PTI