Food inflation rises to 17.05 pc; PM takes stock of situation

New Delhi, Feb 3 (PTI) Food inflation jumped to 17.05 percent in the third week of January, prompting the government totake stock of the price situation at the highest level.

Prime Minister Manmohan Singh along with his seniorCabinet colleagues reviewed price situation as food inflationsoared by 1.48 percentage points for the week ended January22, driven by high prices of vegetables, fruits, milk andeggs.

Although the outcome of the meeting of the CabinetCommittee on Prices (CCP) could not be known, it is learntthat issues concerning rising prices of milk and otheressential food items figured prominently during thedeliberations.

Describing the price situation as matter of "graveconcern", Finance Minister Pranab Mukherjee said that effortswere being made to tame inflation by addressing demand andsupply side issues.

"Price rise always, particularly, the commodity price andfood items are matter of grave concern," the Minister said.

Food inflation was 15.57 per cent in the previousreporting week and 20.56 per cent in the same period a yearago.

Although vegetable prices are likely to moderate in thecoming weeks, protein-based food items like milk, fish andegg are expected to remain firm.

"Real stubborn components are the fibre items, milk, eggand fish. We need to improve production, storage facility andprocessing," Crisil''s Principal Economist D K Joshi said.

Moreover, he added that the impact of political crisis inEgypt and other Middle-East countries on global crude oilprices may cast a shadow on headline inflation, which shot upto 8.43 per cent in December from 7.48 per cent a month ago.

Inflation in ''fuel and power'' segment showed an increaseof 11.61 per cent year-on-year following an increase of petrolprices by Rs 2.50 per litre in January.

Among vegetables, onion prices on annual basis rose by130.41 per cent in the third week of January, although theyhave moderated considerably in the recent days.

Vegetables as a whole became dearer by 77.05 per cent onan annual basis followed by fruits (15.47 per cent), egg, meatand fish (15.05 per cent), milk (11.41 per cent) and potato(6.22 per cent).

The uptick in latest food inflation figure is likely toput further pressure on the government to provide relief tothe common man in the coming budget.

Both the government and the Reserve Bank have beengrappling with high inflation and slowing industrial growththat dipped to the 18-month low of 2.7 per cent for November.