28.3.10

Food inflation at a 4-month low

Food inflation dropped to 16.22% for the week ended March 13, the lowest in four months, but the Reserve Bank of India could still raise rates for the second time in as many months in April to curb the impact of high food and fuel prices from spilling over to non-food items. Food inflation had last slipped to below 16% in the week ending November 15, 2009, when it had dropped to 15.58%, according to the provisional figures. It declined as the pace of rise in prices of potatoes slowed and other vegetables such as onions became cheaper. It came down 0.08 percentage points from the previous week’s level but is unlikely to prevent the headline inflation hitting the double-digit mark in March, up from 9.89% in February. During the week, petrol prices rose 16.82% while diesel turned costlier by 14.99% year-on-year, as the government restored customs on crude and raised excise duty on petrol and diesel.

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