Food inflation at 19.83% on high potato, pulses rates

Food inflation at 19.83% on high potato, pulses rates
Business Standard, January 1, 2010, Page 7

BS Reporter / New Delhi

Food inflation, as measured by the Wholesale Price Index (WPI), rose to 19.83 per cent for the week ended December 19 primarily due to rising prices of potatoes, pulses and other vegetables. Food inflation stood at 18.65 per cent for the previous week ended December 12 and at 9.38 per cent during the corresponding period in 2008.

Food price inflation for the week ended December 5 accelerated to 19.95 per cent, the highest in 11 years. Average food inflation as on December 19 stood at 12 per cent, while inflation of primary articles (non-processed items), including food, on a point-on-point basis stood at 15.49 per cent for the week.

“Contrary to expectations that the food prices will moderate in December, they kept increasing. This has happened because of the drought and untimely rain. Also, uneven temperature in northern India might affect rabi crops. It is very difficult to predict when the food prices will moderate. It will only be clear next month when the rabi crop output will be there, said Rupa Rege Nitsure, chief economist, Bank of Baroda.

Food prices have been rising due to deficient rainfall which has aggravated supply side concerns especially for rice, pulses and wheat. Cereals and pulses, which constitute the essential consumption basket of the common man, registered inflation rates of 13.81 per cent and 41.69 per cent, respectively, for the week against 10.33 per cent and 13.21 per cent in the corresponding period last year.

The rising food inflation has been adding to inflationary expectations leading many analysts to expect a hike in the cash reserve ratio in the quarterly monetary review by the Reserve Bank of India on January 29. However, that might not affect food prices but help in managing inflationary expectations.

The annual rate of inflation was highest for potatoes at 132.74 per cent for the week under consideration.

Prices of fuel, power, light and lubricants rose at a rate of 4.45 per cent during the week ended December 19 from 3.94 per cent a week ago. This is despite the fact that LPG prices declined by 7.42 per cent, petrol by 2.18 per cent and high-speed diesel oil by 0.19 per cent on an annual basis.