Food inflation surges to 8.04% for the week ended July 23

After three week’s successive fall in India’s food inflation measured by Wholesale Price Index (WPI) has surged to 8.04% for the week ended July 23 from 7.33% in the last week. The food inflation for week ended July 16 had touched its 20 month low level. This surge in weekly food inflation is due to the increase in prices of food items such as vegetables, wheat, rice, onion, fruits milk and cereals. However, prices of pulses and potato saw moderation compared to last week.

According to data released by ministry of commerce and industry, the index for 'Food Articles' group, which accounts for 14.34% of WPI, declined by 0.6% to 192.2 (Provisional) from 193.3 (Provisional) for the previous week due to lower prices of fish-marine, poultry chicken and urad (3% each), fruits and vegetables (2%) and egg, condiments and spices, arhar and pork (1% each).  However, the prices of fish-inland, moong and jowar (2% each) and gram, maize, tea, barley and bajra (1% each) moved up.

However, the index for 'Non-Food Articles' group, which accounts for 4.26% of WPI, declined by 0.9% to 174.9 (Provisional) from 176.4 (Provisional) for the previous week due to lower prices of flowers (18%), raw cotton, niger seed and gingelly seed (3% each) and soyabean (1%).  However, the prices of gaur seed (11%), raw silk (6 %), copra (3%), castor seed and cotton seed (2% each) and groundnut seed, rape and mustard seed and sunflower (1% each) moved up.
 
Therefore, the index for Primary Articles group, which accounts for 20.12% WPI, declined by 0.6% to 196.9 (Provisional) from 198.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 10.99% (Provisional) for the week ended July 23 as compared to 10.49% (Provisional) for the previous week July 16.

Meanwhile, the index for fuel and power group, which accounts for 14.91% of WPI, remained unchanged at their previous week’s level of 165.6 (Provisional). The annual rate of inflation, calculated on point to point basis, stood at 12.12% (Provisional) for the week ended July 23.

Recently, the government removed ban over the export of non-basmati rice and wheat, this announcement has affected the domestic prices of these food grains. The RBI in its Economic Outlook for 2011-12 released earlier this week, the Prime Minister's Economic Advisory Council projected headline inflation to remain high at around 9% till October. The rate of price rise will ease from November, declining to around 6.5% by March 2012, it said.

The report also said that while pressure from food inflation has fallen in recent months, the rate of price rice still remained quite high with the possibility of further surge in the coming months. The recent surge in the food inflation comes in line with the government’s expectation, which on the other hand is facing charges from the opposition over the issue of food inflation.