Food inflation declines to single-digit at 9.01% for week ended Nov 12

India’s weekly food inflation measured by the Wholesale Price Index (WPI) slipped below double digits for the first time in five weeks at 9.01% for the week ended November 12, compared to 10.63% in the last week. For the week under review, prices of vegetables, fruits and milk showed a decline of 1.6%, however, all other food items including prices of eggs and poultry became expensive on an annual basis.

According to the data released by the Ministry of Commerce and Industry, the index for ‘Food Articles’ group  declined by 0.7% to 198.5 (Provisional) from 199.8 (Provisional) for the previous week due to lower prices of poultry chicken (6%), bajra and fruits and vegetables (2% each) and condiments and spices, urad, fish-inland, maize and moong (1% each). However, the prices of masur and coffee (4% each), tea (2%) and barley, ragi, fish-marine, wheat and gram (1% each) moved up.

The index for 'Non-Food Articles' group declined by 0.7% to 174.7 (Provisional) from 175.9 (Provisional) for the previous week due to lower prices of raw rubber (9%), gaur seed (3%), sunflower, groundnut seed and raw cotton (2% each) and mesta, copra, coir fibre and castor seed (1% each). However, the prices of flowers (9%), fodder and gingelly seed (3% each), linseed and raw silk (2% each) and raw jute and rape and mustard seed (1% each) moved up.

However, the index for 'Minerals' group rose by 0.4% to 310.5 (Provisional) from 309.2 (Provisional) for the previous week due to higher prices of crude petroleum (1%). As a result the index for ‘Primary Articles’ which accounts for 20.12% of the WPI declined by 0.5% to 201.9 (Provisional) from 203.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 9.08% (Provisional) for the week ended November 12 as compared to 10.39% (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 171.5 (Provisional) and 15.49% (Provisional) for the week ended November 12.

In spite of food inflation coming into single digit after hovering above 10% mark for five successive weeks, is still significantly above the Reserve Bank of India’s (RBI) comfort zone. However, this significant decline in the food inflation is expected to provide some relief to the government and RBI, which have been fighting to curb the high inflation. 

On November 23, Finance Minister Pranab Mukherjee said that ‘the government’s immediate priority is to contain price rise. High inflation and also some of the efforts to control liquidity has a detrimental effect on short-run growth. The immediate priority is to control inflation so that long-term growth prospects are not affected.’

Though after it had hiked rates in October the RBI said it would hold off another increase if inflation showed signs of decline, however, RBI's Governor D Subbarao said he would not hesitate to tighten rates further if inflation did not come down as expected. Overall inflation too has remained stubbornly high, near double digits, since January 2010. Headline inflation based on the wholesale price index was recorded at 9.73% in October, according to the latest data available.