Food prices stood at negative 3.36 per cent from a year earlier in the week to December 24,their first fall in nearly six years,as the costs of vegetables continued to fall from their high levels in the previous winter.
The Wholesale Price Index,published by the government on Thursday,showed food-price inflation at 0.42 per cent in the previous week. Food-price inflation had not turned negative since 2004-05 prices were adopted as the statistical base for the series.
Finance Minister Pranab Mukherjee was encouraged by the fall in food prices from their levels a year earlier,which were driven high by unseasonal rains in Maharashtra.
Mukherjee said,There has been substantial improvement. Food inflation has turned negative for the first time in the recent memory, he said.
Vegetables continued to grow cheaper,helped by a good monsoon,while inflation fell for cereals and milk. Cereal prices were 1.97 per cent higher than twelve months previously,having been 2.15 per cent higher than their levels a year ago in the week to December 17.
Vegetables were 50.22 per cent cheaper than a year earlier,having been 36.02 per cent cheaper in the previous week. Inflation shed 14.70 percentage points to -73.74 per cent for onions and 0.25 percentage points to -34.01 per cent for potatoes.
Milk was 9.49 per cent dearer than a year ago,having been 11.30 per cent dearer in the previous week. Inflation added 2.41 percentage points to 10.87 per cent for fruits and 2.26 percentage points to 13.82 per cent for eggs,fish and meat.
C Rangarajan,chairman of the Prime Ministers Council of Economic Advisers (PMEAC),said the government would wait for headline inflation figures before judging the direction of prices in the economy,which seemed to be leading the Reserve Bank of India towards cutting repo rates.
Rangarajan said: We have to wait for December inflation figures to see if the non-food manufacturing numbers have also followed the same path… the environment appears to be in favour of the Reserve Bank reversing its
monetary policy stance.