Food inflation at five-month high,weighs heavy at 10.05%

Food inflation once again breached the double-digit limit after five months,standing at 10.05 per cent for the week ended August 20.

Food inflation once again breached the double-digit limit after five months,standing at 10.05 per cent for the week ended August 20. The rise was mainly due a huge increase in prices of vegetables and onions.

According to a data released today,vegetable prices jumped 11.64 per cent week-over-week while onion became costlier by 12.34 per cent during the week. Prices of wheat and pulses also rose 0.12 per cent and 0.83 per cent respectively.

Food inflation,as measured by wholesale price index,stood at 9.80 per cent during the previous week. Food inflation had entered the double-digit mark on March 12 this year at 10.05 per cent. Food articles have a weight of 14.34 per cent in the overall WPI basket.

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Reacting to the inflation numbers,Finance Minister Pranab Mukherjee said,This is really disturbing. We shall have to ensure and remove the supply constraints on food items.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said that seasonal factors were pushing up food prices.

If you see the data,last year at this time food prices went down and then rose again. So,I would not be surprised if prices rise a little bit, he said.

Year-on-year,prices of onion rose 57.01 per cent while that of vegetables by 15.78 per cent. Fruits became expensive by 21.58 per cent and protein rich items,egg,meat and fish were up 12.62 per cent,while milk and cereals became dearer by 9.22 per cent and 4.64 per cent respectively.

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Headline inflation in June stood at 9.22 per cent. Both the central bank and PMEAC had projected headline inflation to remain high at around 9 per cent till October.

Experts said that seasonal factors like heavy rainfalls in some parts of the country has pushed the prices up and the Reserve Bank of India is likely to continue with the hawkish monetary stance in the mid-quarter policy review on September 16.

With headline inflation remaining well above 9 per cent,we expect RBI to raise key policy rates by 25 basis points at its next mid-quarterly review, Crisil chief economist D K Joshi said.

Prime Ministers Economic Advisory Council Chairman C Rangarajan also said the food inflation is likely to come down in the coming weeks as the monsoon has been good. We are almost towards the end of the monsoon and all indications are that the agricultural production will be good during this year, he said.