Food inflation moderates, but still high at 16.91 pc

New Delhi, Jan 13 (PTI) Food inflation declined, butstill remained at an elevated level of 16.91 per cent for theweek ended January 1, prompting the Government to assure moresteps to rein in prices of essential items that have moved up.

Even as food inflation moderated from 18.32 per cent fromthe previous week, overall inflation is likely to be pushed upin the range of 8.2-8.5 per cent in December from 7.48 percent in the previous month, economists said.

The overall inflation for December, slated to be releasedtomorrow, is expected to pressure RBI to further hike policyrates at its January 25 policy review, despite industrialgrowth plunging to 18-month low in November.

Even as food inflation showed a meagre decline, vegetableprices were up 3.84 per cent during the week, with onion ratesrising by 1.73 per cent.

With prices of the bulb already up, this much rise in itsprices within a week, makes it still costlier.

The extent of rise could be gauged from the fact thatonion turned expensive by 70.70 per cent year-on-year. Overallvegetables were costlier by 70.73 per cent on an annual basis.

Among the individual items in the food inflation index,egg, meat and fish became costly by 16.70 per cent, milk by13.20 per cent and fruits by 17.71 per cent annually.

However, prices of pulses declined by 14.84 per cent,wheat by 4.87 per cent, potatoes by 1.67 per cent and cerealsby 0.12 per cent on an annual basis.

In the non-food category, the prices of fibres andminerals have climbed 36.71 per cent and 16.70 per centrespectively.

Analysing the inflation figures, Standard Charteredregional head of research Samiran Chakraborty said there hasbeen no real decline in prices of vegetables.

"Year on year drop is mainly because of the base effect.

Prices continued to remain high. However, week-on-week milkand electricity (prices) have declined," Chakraborty said.

Exuding confidence of being able to rein in food prices,Finance Minister Pranab Mukherjee told reporters,"We haveanalysed the situation. We have indicated what further stepswe are going to take."

However, he cautioned against any "unnecessary panic."

"We have also indicated that there should not be anyunnecessary panic. I always believe, today it is veryencouraging weekly fluctuation, next week it may be or not be,because of one or two or three commodities," he said.

Expecting RBI to hike rates by 25 basis points in Januarypolicy review, Chakraborty pegged overall inflation to be8.3-8.5 per cent in December.

However, Crisil chief economist D K Joshi expects foodinflation to come down further, unless there is another supplyconstraint.

He expected overall inflation to stand at 8.2 per cent inDecember, but that the rate would moderate to 6.5 per cent byMarch-end.