Food inflation falls to two-month low of 11.05 pc
Food inflation fell to a two- month low of 11.05 pc for the week ended 5th February as onions prices moderated and pulses became cheaper, prompting Finance Minister Pranab Mukherjee to assert that the rate of price rise will fall to a single digit in some time.Food inflation fell by 2.02 percentage points for the week ended 5th February from 13.07 percent in the previous week.”… In quite some time, food inflation will also be under single digit,” Mukherjee said, adding that headline inflation will moderate to 7 percent by March-end from 8.23 percent in January.
Driven by high vegetable prices, food inflation has been in double digits for the past two months and had even crossed 18 percent in the last week of December.On an annual basis, prices of potatoes declined by 13.63 percent, pulses by 5.88 percent and wheat by 2.54 percent in the week ended 5th February.However, on the whole, vegetables became nearly 24 percent costlier during the week ended 5th February. This was primarily on account of onions, which were 31.33 percent higher during the week on an annual basis.
The spike in food prices, especially during December and January, has become a cause of concern for the government and it has taken several measures to tame it.A Group of Ministers (GoM) on Food, headed by Mukherjee, met on Thursday to take stock of the situation.Meanwhile, the decline in food inflation for the past two weeks prompted Planning Commission Deputy Chairman Montek Singh Ahluwalia to say the trend would continue.Other economists, however, said while there would be further moderation in vegetable prices, overall food inflation will remain in double digits in this month.
“While vegetable prices may ease further in the coming weeks, prices of other food items are likely to remain sticky and average food inflation may remain in the low double-digits in February, 2011,” ICRA Economist Aditi Nayar said.Even though prices have come down over the previous week, the average rate of food inflation on a yearly basis, at 17 percent, is still high.”The yearly average of food inflation is still very high, as onions and vegetables remain high, which is a cause of concern,” Dhanlaxmi Bank Head (Policy & Research) Rajrishi Singhal said.
The Finance Minister also sounded cautioned that a weekly decline in food inflation could be “deceptive”. He, however, expects wholesale price index (WPI)-based inflation to come down to 7 percent by March-end.”I hope, as I mentioned earlier, by March we able to reach overall inflation of 7 percent,” Mukherjee added.Headline inflation, as measured on the basis of the WPI, moderated to 8.23 percent in January from 8.43 percent in the previous month.During the first week of February, the fuel price index was up 11.92 percent for the week.
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on Feb 18 2011. Filed under Breaking News, Business.
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