Food inflation declines; brings no consolation to govt, people

New Delhi, Jan 20 (PTI) Food inflation slid for thesecond week in a row, declining to 15.52 per cent for the weekended January 8, but gave no ''consolation'' either to thegovernment or the common man as vegetable prices continued torule high.

Food inflation fell by 1.39 per cent from 16.91 per centin the previous week though the numbers do not factor in therecent hike in petrol prices which will get reflectedsubsequently.

"These are weekly fluctuation and naturally we shall haveto watch the situation. Some of the vegetable prices are stillhigh. The fact of the matter is from 16.91 per cent it hascome down to 15.52 per cent..Though it is not much consolationbut declining trend is there," Finance Minister PranabMukherjee said after the release of the weekly data.

Spiralling prices of vegetables and onions spiked foodinflation as it remained in double digit throughout December.

To control the price rise, the Centre asked stategovernments to remove supply side bottlenecks.

Vegetable prices, however, continued to remain firm goingup by 65.39 per cent over the same period last year. Onionprices doubled during the year.

While fruits became expensive by 15.91 per cent, pricesof milk rose by 13.27 per cent and egg, meat and fish by 12.94per cent.

Prices of pulses, however, declined by 14.92 per cent,followed by wheat (6.11 per cent), and potato (2.91 per cent)on yearly basis.

Meanwhile, in the non-food category, the prices offibres and minerals have climbed up by 46.77 per cent and16.70 per cent respectively over the year-ago period.

"We shall have to watch the situation. All necessaryeffective steps are being taken including improving of supplymanagement," Mukherjee said.

Analysts said food inflation is now on a decliningtrajectory and felt it would come down to single digit bymid-February.

"I expect similar kind of a decline in food inflationnext week. By mid-February it will be back in single digits,"ICRA Economist Aditi Nayar said.

Analysts also expect the Reserve Bank to undertake a25 basis points rate hike during the January 25 policy reviewmeeting.

Yesterday at a meeting with the state finance ministers,Mukherjee had asked them to remove local levies like octroiand mandi tax to bridge the gap between farmgate andretail prices.

The states, however, asked the centre to reduce duties oncrude oil and petroleum products to tame prices.