Food inflation falls for second straight week

India's food price inflation eased for the second consecutive week in July even as inflation in Primary Articles and Fuel groups remained nearly unchanged at an elevated level, data released by the Government showed. Inflation in the Non-Food space climbed but prices in the Minerals group declined, the data showed. According to the Commerce Ministry data, inflation in the Food Articles group stood at 9.53% in the week ended July 24 as against 9.67% in the previous week. Inflation in this group was at 14.58% in the week ended July 25, 2009.



Inflation in the Primary Articles group came in at 14.36% in the week under review compared to 14.50% in the week ended July 17, the Commerce Ministry data showed today. Inflation in this group stood at 7.89% during the corresponding week of the previous year. Fuel Group inflation edged lower to 14.26% in the week ended July 24 versus 14.29% in the preceding week, the data showed. Inflation in the Fuel & Power group stood at (-)10.63% during the corresponding week of the previous year.

Inflation in the Non-Food Articles group rose to 21.28% from 21.01% in the week ended July 17. It was at (-)3.64% in the week ended July 25, 2009. Inflation in the Minerals group stood at 51.52% in the week under review as against 53.47% in the preceding week. It was at (-)13.99% in the week ended July 25, 2009. The WPI for this group declined by 1.3% to 855.2.

Inflation in key food product categories like Cereals, Rice and Pulses fell in the week ended July 24 from the same period last year while price increase in Wheat, Fruits and Milk accelerated from last year. The good news is that prices of other essentials like Vegetables, Potatoes and Onions contracted in the week under review versus the year-ago period.

Though the recent deceleration in food inflation is gradual it still should provide some relief to the policymakers as Opposition parties continue to attack the Government on the critical issue of price rise. On July 27, the RBI raised interest rates for the fourth time since mid-March and added that the southwest monsoon is critical to bring down WPI inflation to 6% by March 31 from 10.55% in June. The central bank hiked the reverse repurchase rate by 50 basis points to 4.5% while the repurchase rate was revised higher by 25 basis points to 5.75%. The cash reserve ratio (CRR) was left unchanged at 6%. The RBI will next take up a review of interest rates on September 16.