Food inflation edges up...hovers near 18%

There is no respite for the common man from spiraling food prices, even as fuel prices have softened a bit. Food inflation rose for the fourth straight week in early February, climbing to the highest level in six weeks, data released by the Commerce & Industry Ministry showed. Point-to-point inflation for the Food Articles group rose at a 17.97% pace in the week ended February 6 as against the annual rise of 17.94% in the previous week, the Government data revealed.

Inflation in the Fuel & Power group dropped to 9.89% in the early part of February compared to 10.44% in the previous week, the Commerce Ministry said. Inflation in this group was at (-) 3.03% during the same week last year. On the other hand, inflation in the Primary Articles group rose to 16.33% from 15.75% in the week ended January 28. It was at 7.05% during the corresponding week (Feb. 7, 2009) of the previous year. The WPI for the Primary Articles group rose by 0.2% to 285.8 from 285.2 in the previous week.

The relentless spurt in food and fuel prices has driven the headline inflation past the official forecasts, putting more pressure on the Reserve Bank of India (RBI) to raise interest rates ahead of its annual policy meeting in April. India's monthly WPI-based inflation jumped to 8.56% in January and is likely to touch 10% by the end of March, according to chief statistician Pronab Sen. Inflation has already surpassed the RBI's revised end-March inflation forecast of 8.5%.

Inflation in the manufacturing sector also picked up to 6.55% from about 5% in December, a sign that inflationary pressures were spreading to other sectors of the economy as well, and is not restricted to food group alone.