Food inflation at 7-wk low of 13.07 pc; but prices still high

Posted By: Pti
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New Delhi, Feb 10 (PTI) Food inflation declined to aseven-week low of 13.07 per cent in end-January, as prices ofpotatoes and pulses eased, even as consumers continue to feelthe pinch of high rates of vegetables.

Food inflation, which snapped the three-week risingtrend, fell by nearly 4 percentage points from 17.05 per centin the week ended January 22. It was 22.08 per cent ayear-ago.

The last time food inflation has come down to such alevel was for the week ended December 11 when it stood at12.13 per cent.

Experts said there would be further slide in inflationrates due to the expected record crop of wheat and pulses.

Government estimates suggest overall foodgrain productionfor 2010-11 at 232.07 million tonnes, against 218.2 milliontonnes last year.

Wheat production is estimated to touch an all-time highof 81.47 million tonnes in 2010-11 crop year.

Pulses and cotton production are also projected to setfresh records of 16.51 million tonnes and 33.9 million bales,respectively.

"In the coming weeks we could expect further moderationin food prices, specially foodgrains. The expected recordproduction of wheat and pulses will act as a factor in easingthe food prices," Crisil chief economist D K Joshi said.

However, the decline in food inflation is unlikely toshow much impact on the headline inflation numbers forJanuary, which is expected on February 14. The inflation inDecember stood at 8.43 per cent.

"The overall WPI inflation for January 2011 is expectedat around 8.5 per cent, on back of high primary inflation,"ICRA economist Aditi Nayar said.

The decline in food inflation numbers is also unlikely toease pressure on Reserve Bank, whose current monetary policystance is anti-inflationary.

The apex bank had last month raised short term lendingand borrowing rates by 25 basis points to tame rising prices.

During the week ended January 29, prices of pulses fell8.63 per cent, potatoes by 8.87 per cent and wheat by 3.58 percent on an annual basis, data released by the governmentshowed.

Onion prices, which more than doubled in the previousweek, has eased subsequently. However, the kitchen staplestill remain dearer by 79 per cent for the week under review.

Last month, goverment pumped in 300 metric tonnes ofimported onions and would bring in another 426 tonnes in themarket soon.

Vegetables as a whole have turned costlier by 44.34 percent on an annual basis during the week under review.

ICRA''s Nayar, however, said that vegetable prices areexpected to ease in the coming weeks.

During the week, fruits and milk became costlier by 10.46per cent and 11.66 per cent respectively, while egg, meat andfish turned expensive by 17.06 per cent. .

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