Food inflation falls to nine-week low of 11.05 percent

NEW DELHI - India’s annual food inflation dropped to a nine-week low of 11.05 percent for the week ended Feb 5 as prices of essential items like pulses and potatoes dropped, according to official data released Thursday.

The food inflation had dropped nearly four percentage points to 13.07 percent in the previous week.

Buoyed by the recent declines, Finance Minister Pranab Mukherjee said the prices should moderate further and food inflation would come down to single-digit soon and overall inflation will be around 7 percent by March end.

“I hope by March overall inflation will be 7 percent. In quite some time food inflation will also be under single digit,” Mukherjee told reporters here.

The finance minister said inflation based on wholesale prices that moderated to 8.23 percent in January from 8.43 percent in the previous month, should come down further in next one to two month.

Reacting on the weekly data, Mukherjee said: “Not only has food article inflation fallen but actual food prices have fallen very substantially with the index going down to 182.9 from 186.9 in the previous week.”

The data should give some respite to the government which has been trying out various measures from monetary policy tightening to a slew of initiatives like selling essential food items by state-run agencies and a crackdown on hoarders.

In an interaction with editors of TV news channels Wednesday, Prime Minister Manmohan Singh had assured the country that food inflation would come down and overall inflation be no more than 7 percent by March-end.

The annual inflation for primary articles declined to 14.59 percent during the week ended Feb 5, compared to 16.24 percent in the previous week.

The fuel index, however, rose to 11.92 percent as against 11.61 percent in the week before.

“Overall the picture is that of inflation softening. We expect this trend to continue till March. However, from a long term perspective concerns still remain,” said Anis Chakravarty, Director, Deloitte, Haskin and Sells.

“World food prices are at an all-time high, and the government needs to proactively consider measures to reign in supply driven inflation. Overall fiscal consolidation is also necessary and we expect measures to this effect will be announced in the coming budget,” Chakravarty added.

The following are the yearly rise and fall in prices of some main commodities that form the sub-index for food articles:

Onions: 31.33 percent

Vegetables: 23.99 percent

Fruits: 12.21 percent

Potatoes: (-)13.63 percent

Milk: 11.66 percent

Eggs, meat, fish: 15.14 percent

Cereals: 1.53 percent

Rice: 1.89 percent

Wheat: (-)2.54 percent

Pulses: (-)5.88 percent