“There has been substantial improvement. Food inflation has turned negative for the first time in recent memory,” Finance Minister Pranab Mukherjee told reporters here.
This is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis.
Food inflation, as measured by Wholesale Price Index (WPI), stood at 0.42 per cent in the previous week. It was almost 21 per cent in the corresponding week of 2010.
According to the official data released today, onion became cheaper by 73.74 per cent year-on-year during the week under review, while potato prices were down by 34.01 per cent.
Prices of wheat also fell by 3.41 per cent.
Overall, vegetables became 50.22 per cent cheaper during the week ended December 24.
The fall in the rate of price rise of food items has been substantial since the first week of November, when it stood at double-digit.
Experts feel that the decline in food inflation will be a major incentive for the Reserve Bank to look at the option of key interest rate cuts at its next quarterly monetary policy review later this month.