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Food inflation eases further at 10.63%, still in double-digits

17 Nov 2011 Evaluate

India’s weekly food inflation measured by the Wholesale Price Index (WPI), despite easing for the second consecutive week at 10.63% for week ended on November 05 compared to 11.81% in the last week, remained in double digits. This decline in food inflation came even after the prices of agricultural items, barring onions and wheat, continued to rise on an annual basis.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group declined by 0.9% to 199.8 (Provisional) from 201.7 (Provisional) for the previous week due to  lower prices of fish-inland (5%), masur (4%), poultry chicken (3%), fruits and vegetables (2%) and ragi, urad, maize, gram, wheat and condiments & spices (1% each).  However, the prices of bajra (3%), jowar (2%) and tea (1%) moved up.

Even the index for ‘Non-Food Articles’ group declined by 0.9% to 175.9 (Provisional) from 177.5 (Provisional) for the previous week due to lower prices of logs and timber (17%), mesta (10%), flowers (6%), raw rubber and rape and mustard seed (3% each) and raw jute (2%). However, the prices of castor seed (5%), sunflower (2%) and soyabean, linseed and gaur seed (1% each) moved up.

As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.8% to 203.0 (Provisional) from 204.7 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 10.39% (Provisional) for the week ended November 05, 2011 as compared to 11.43% (Provisional) for the previous week.

Meanwhile, the index for ‘Fuel and Power’ group, which accounts for 14.91% of WPI, rose by 1% to 171.5 (Provisional) from 169.8 (Provisional) for the previous week due to higher prices of aviation turbine fuel (6%), furnace oil (5%), naphtha (4%) and light diesel oil and petrol (3% each).

Concerned over the inflationary spiral, the government said, it is taking steps to remove supply bottlenecks and expects prices to ease from December. 'We are taking care to remove the supply constraints and I do hope from the month of December, inflation pressure would be moderate,' Finance Minister Pranab Mukherjee said.

Headline inflation, which also factors in manufactured items, has been above the 9 percent-mark since December, 2010. It stood at 9.73% in September this year. The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation.

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