Food and fuel inflation softens

India's food inflation, based on the annual Wholesale Price Index (WPI), eased in the penultimate week of October, Government data showed. However, food inflation is still pretty high, justifying the RBI's decision this week to hike policy rates for the sixth time this year. Inflation for the Food Articles group stood at 12.85% in the week ended October 23, lower that the previous week's annual rise of 13.75%, the Commerce & Industry Ministry said today. Inflation in Food Articles group was at 12.87% in the year-ago period. The index for Food Articles group declined by 0.2% to 179.1.



According to the data, inflation for the Primary Articles group stood at 15.43% during the week ended Oct. 23 as against 16.62% during the previous week. It was at 10.94% in the corresponding week last year. The index for the Primary Articles group declined by 0.4% to 180.3 from 181.0 in the previous week.

Inflation for the Fuel & Power group was at 10.67% versus an annual rise of 11.25% in the previous week. It stood at (-)5.83% in the week ended Dec. 24, 2009. The index for this group remained unchanged at its previous week's level of 148.3. Inflation in the Non-Food Articles and Minerals group also declined to 21.64% and 23.55%, respectively from 22.80% and 26.60% in the week ended Oct. 16.

Higher food prices have already pushed up headline monthly inflation to 8.62% in September from 8.5% in the previous month, as against the RBI's comfort zone of 5-6%. The central bank this week hiked the repurchase rate (repo rate) and the reverse repo rate by 25 basis points each to 6.25% and 5.25%, respectively in a bid to curtail inflation. However, the RBI did hint at a pause amid some signs of cooling in the economy.