Food inflation fell to seven-week low at 7.61%

India’s food inflation measured by the Wholesale Price Index (WPI) has moderated to 7.61% for week ended June 25 from 7.78% in previous week. This moderation in food inflation is due to the reduced prices of vegetables, pulses and potato. As per the official data, pulses became over 9% cheaper year-on-year during the period under review. Prices of vegetables also came down by 8.74%, while potatoes became 2.13% cheaper on an annual basis. This seven week low food inflation numbers is likely to come as a relief to the government, which had to deal with a series of bad news during recent weeks on the economic front.

According to the data released by the Ministry of Commerce and Industry on July 7, food price index declined to 7.61% on annual basis during week ended June 25, from an annual rise of 7.78% recorded in the last week. However, the index for 'Food Articles' group which has a weight of 14.34% in WPI, rose by 0.5 % to 190.8 (Provisional) from 189.8 (Provisional) for the previous week due to higher prices of coffee (21%), mutton (6%), gram and fruits and vegetables (2% each) and jowar and masur (1% each).  However, the prices of ragi (3%), tea (2%) and fish-marine, moong, condiments and spices, bajra, egg, urad and barley (1% each) declined.

The index for 'Non-Food Articles' group, which has a weight of 4.26%, declined by 0.4% to 179.6 (Provisional) from 180.4 (Provisional) for the previous week due to lower prices of raw jute (12%), flowers (8%) and raw rubber (3%).  However, the prices of linseed (17%), safflower (6%), gingelly seed (4%), raw silk (3%), fodder (2%) and gaur seed, sunflower and soyabean (1 % each) moved up.

The index for 'Minerals' group declined by 0.4 percent to 314.7 (Provisional) from 316.0 (Provisional) for the previous week due to lower prices of crude petroleum (1%).  As a result, the broader 'primary Articles' Index, which has a weight of 20.12% in WPI, rose by 0.2% to 197.8 (Provisional) from 197.4 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.56% (Provisional) for the week ended June 25 as compared to 11.84% (Provisional) for the previous week June 18. 

The index for 'fuel and power' with a weight of 14.91% in overall WPI, rose by 3.8% to 166.3 (Provisional) from 160.2 (Provisional) for the previous week due to higher prices of kerosene (18%), LPG (15%) and high speed diesel (9%).  However, the prices of bitumen and furnace oil (4% each) and naphtha (3%) declined. The annual rate of inflation, calculated on point to point basis, stood at 12.67% (Provisional) for the week ended June 25 as compared to 12.98% (Provisional) for the previous week June 18. However, the hike in prices of diesel, cooking gas and kerosene announced on 24th June week by the government is yet to be reflected in these numbers.

The government expects the monsoon to be normal this year and expected to have a moderating impact on food inflation numbers. However, Finance Minister Pranab Mukharjee on July 6 said, that the there is a certain urgency in addressing the strong structural component in food inflation including ‘Protein Inflation’.  There are also some concerns due to elevated global food prices, he added.