India’s weekly food inflation surged to 9.41% for the week ended September 24

India’s weekly food inflation, measured by the wholesale Price Index (WPI), surged to 9.41% for the week ended September 24 from 9.13% in the last week. This increase in weekly food inflation was because of the increase in the price of the vegetables, Cereals, Rice and Pulses. However, the index for Non-Food Articles declined to 10.77% for the week under observation compare to 12.89% in the last week.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.8% to 197.3 (Provisional) from 195.7  (Provisional) for the previous week due to higher prices of gram (6%), masur, arhar, urad, poultry chicken, condiments & spices and fish-marine (2% each) and fruits & vegetables, maize, jowar and milk (1% each).  However, the prices of barley (4%), coffee (3%) and bajra and ragi (2% each) declined.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.2 % to 197.7 (Provisional) from 197.3  (Provisional) for the previous week due to higher prices of fish-inland (13%), gram (4%), ragi, egg, urad and condiments & spices (2% each) and masur, moong, arhar, fruits & vegetables, rice, pork and barley (1% each).  However, the prices of fish-marine (14%) and jowar, maize, tea, bajra and poultry chicken (1% each) declined.

The index for 'Non-Food Articles' group declined by 1.5 % to 182.1 (Provisional) from 184.8  (Provisional) for the previous week due to lower prices of raw silk (6%), raw cotton and coir fibre (5% each), castor seed, safflower (kardi seed) and copra (3% each), flowers (2%) and sunflower, raw rubber and rape & mustard seed (1% each).  However, the prices of gingelly seed (3%), linseed (2%) and gaur seed, cotton seed and soyabean (1% each) moved up.

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI, declined by 0.1 % to 202.4 (Provisional) from 202.7 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 10.84 % (Provisional) for the week ended September 24 as compared to 11.43 % (Provisional) for the previous week.

Meanwhile, the index for Fuel and Power group which has a weightage of 14.91% in WPI remained unchanged at its previous week's level of 169.4 (Provisional). The annual rate of inflation, calculated on point to point basis, has also remained unchanged at its previous week’s level of 14.69 % (Provisional) for the week ended September 24.

As food inflation again moving close to two digit mark, has raised the concern of government and industry. To bring inflation back under comfort zone, the government will have to reduce the supply side barriers as the further hike in Reserve Bank of India’s (RBI’s) key policy rates will adversely affect the economic growth. In last 18 months, to cap inflation, the RBI has increased its key policy rates by 12 times. However, despite the aggressive monetary policy standing adopted by the RBI, headline inflation has remained stubbornly high. For the month of August, it stood at 9.78% compare to 9.22% in July.