Food inflation at 13-month low

Food inflation dipped to a 13-month low of 9.53% in the week ended July 24, continuing its slide for the second week in a row and providing a much-needed breather to the government which has been under sustained Opposition attack over rising prices. The index of wholesale prices of farm products declined 0.14 percentage points from 9.67% a week ago as monsoon intensified across the country to give an impetus to sowing of rice and lentils. This has raised hopes of a good crop and lower prices. Last year, food inflation was at 14.58% in the corresponding period. The present decline, thus, is also partly due to the high base effect. Finance minister Pranab Mukherjee, however, told Parliament that steps taken by the government had brought the index down from its high of over 21%. He also said RBI was keeping a watch on the situation.
Analysts expect food inflation to decline further after new crops reach the markets but said it won’t prompt RBI to relax its tight monetary stance. But major items in the fuel inflation saw no change in prices, as the fuel price hike had a onetime impact on prices. However, aviation turbine fuel fell by 4%, leading to a decline in fuel, power, light and lubricants inflation to 14.26%.
Among food items, vegetables turned cheaper by 3%, sea fish by 2% and fruits by 2.34% compared to the previous week. Compared to last year, vegetables were less expensive by 17.32%. Among vegetables, potatoes were cheaper by 41% and onions by over 4%. According to NCAER chief statistician Rajesh Shukla, improved monsoons had raised expectations of a better crop and there was also an increase in output.