Food inflation softens...Fuel inflation steady

India's food inflation, based on the annual Wholesale Price Index (WPI), eased in the last week of October while fuel inflation remained steady, Government data showed. However, food inflation is still pretty high, justifying the RBI's decision last week to hike policy rates for the sixth time this year.



Inflation for the Food Articles group stood at 12.30% in the week ended October 30 versus 12.85% in the week ended October 23, the Commerce & Industry Ministry said. Inflation in Food Articles group was at 12.59% in the year-ago period. The index for Food Articles group rose by 0.4% to 179.8.

According to the data, inflation for the Primary Articles group stood at 14.87% in the week under review compared to 15.43% during the week ended Oct. 23. Primary Articles inflation was at 10.85% in the week ended October 31, 2009. The index for the Primary Articles group rose by 0.3 percent to 180.8 from 180.3 in the previous week.

Inflation for the Fuel & Power group was unchanged at 10.67%. Fuel inflation stood at (-)2.33% in the week ended October 31, 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 declined to 20.49% and 23.30%, respectively from 21.64% and 23.55% in the week ended Oct. 23. The year-ago inflation level for these two indices was at 4.52% and 11.15%, respectively.

Higher food prices 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 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.