Food inflation moderates further to 15.52 %

Food inflation in India moderated for the second week in a row in the early part of January after spiking to nearly a two-year peak in late December, providing some more relief to both policymakers and consumers alike. The annual rate of inflation in the sensitive Food Articles space decreased in the week ended January 8, data released by the Government showed.

This was the second decline in food inflation after rising for five consecutive weeks. Inflation in the Food Articles group fell to 15.52% in the week ended January 8 from 16.91% in the week ended January 1, the Union Commerce & Industry said. Inflation in the Food Articles space was at 18.62% in the year-ago period.



Inflation in the Primary Articles group also declined to 17.03% in the week under review from 17.58% in the preceding week. Inflation in the Primary Articles space was at 18.88% in the comparable period last year. Inflation in the Fuel & Power group remained unchanged at 11.53% in the week ended January 8, the Commerce & Industry said. Inflation in the Fuel & Power space was at 5.87% in the week ended January 9, 2010.

Inflation in the Non-Food Articles group stood at 23.07% in the week under consideration versus 20.49% in the previous week. Inflation in this group stood at 12.16% in the year-ago period. Inflation in the Minerals group was at 16.70%, unchanged from the week ended January 1. It was at 35.86% in the comparable period a year earlier.

On an annual basis, onions became costlier by 98.15% in the week ended January 8, whereas on a week-on-week basis, the increase was 14.83%. The year-on-year increase in vegetable prices was 65.39% while on a weekly basis vegetables turned cheaper by 3.55%.Fruits turned costlier by 15.19% year over year, while milk prices increased by 13.27% on an annual basis during the week under review.

Egg, Meat & Fish became pricey by 12.94% compared to the year-ago period. Potatoes turned cheaper by about 3% annually while inflation in Cereals was almost negligible year over year and that in Pulses fell by nearly 15%. Annual inflation in Rice stood at 2.86% while wheat prices fell by 6.1%.

However, inflation still remains at a pretty elevated level and may not be able to dissuade the RBI from increasing interest rates at its next policy meeting on January 25. The RBI Governor Duvvuri Subbarao said that the country is facing surging inflation and that the central bank needs to calibrate monetary policy in order to manage inflation and also support growth. The RBI is widely expected to raise policy rates by a total of 75-100 basis points in 2011.