Food inflation continues to bite...prices edge up further

Food inflation, based on the annual wholesale price index (WPI), climbed further to 17.56% during the week ended January 23, higher than the previous week's annual rise of 17.40%. Food inflation gained for the second week in a row after easing for three successive weeks. Food inflation, which had begun easing after touching its highest levels in nearly a decade at around 20% in December, rose mainly because potatoes were up 44.91% and pulses 44.43% year-on-year in the latest week. In the Primary Articles group, annual rate of inflation, stood at 14.56% compared to 14.66% the previous week and 8.89% in the corresponding week of the previous year. Inflation in the Fuel group stood at 5.88% for the latest week as compared to 5.70% for the previous week. The annual WPI-based inflation had surged to 7.31% in December 2009, compared with 4.78% in November. In its January monetary policy review, the RBI recently raised its projection for inflation to 8.5% from earlier 6.5% by this fiscal-end. But, the RBI expects inflation to moderate starting in July, assuming a normal monsoon and global oil prices holding at current levels.