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India’s food inflation eases to 11.81% for week ended on October 29

11 Nov 2011 Evaluate

India’s weekly food inflation measured by the Wholesale Price Index (WPI), eased to 11.81% for week ended on October 29 compared to 12.21% in the last week. This decline in food inflation after four successive increases is mainly because of decline in prices of decline in vegetables, wheat, onion and poultry products.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group declined by 0.2% to 201.7 (Provisional) from 202.2  (Provisional) for the previous week due to lower prices of fish-inland (3%), bajra (2%) and fruits & vegetables, moong and condiments & spices (1% each).  However, the prices of gram, egg, fish-marine, ragi and poultry chicken (2% each) and maize, urad and tea (1% each) moved up.

However, the index for ‘Non-Food Articles’ group rose by 0.2% to 177.5 (Provisional) from 177.2  (Provisional) for the previous week due to higher prices of flowers (7%), gaur seed (4%), rape & mustard seed (2%) and sunflower, raw rubber and raw jute (1% each).  However, the prices of groundnut seed (3%), coir fibre, linseed, raw silk and niger seed (2% each) and copra, gingelly seed and castor seed (1% each) declined.

As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.1 % to 204.7 (Provisional) from 205.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.43% (Provisional) for the week ended October 29 as compared to 12.08% (Provisional) for the previous week.

Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, remained unchanged at their previous week`s level of 169.8 (Provisional) and 14.50% (Provisional) for the week ended October 29.

Earlier in this week, Finance Minister Pranab Mukherjee said that food inflation in India is a matter of great concern and the principle reason for the recent spike in inflation is that the demand for eggs, meat, vegetables and milk has increased.

Despite the marginal decline in food inflation, it still is hovering close to 12% mark, which is almost double the Reserve Bank of India’s comfort zone. However, RBI expects inflation to start moderating from December.

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