Food inflation eases

Food inflation eased to its lowest since February 2009 on the back of a softening in prices of pulses, milk, eggs, meat and fish, but analysts say risks still persist that will maintain the pressure on prices. Data released by the commerce and industry ministry showed food inflation stood at 7.33% in the week to July 16, easing from the previous week’s reading of 7.58%. Food inflation, which shot up to double digits last December, has been softening as supplies have picked up. Pulses prices declined 8% in the week to July 16 from a year ago but prices of onions, fruit and vegetables rose. Finance minister Pranab Mukherjee did not read too much into the easing of food inflation in mid-July, and said inflationary pressures were still there in the economy. The Reserve Bank of India (RBI) has identified several risks to growth and inflation in the months ahead and has said there are risks to food inflation stemming from the monsoon performance, higher minimum support prices and inadequate supply response pertaining to protein-rich items. The RBI on Tuesday raised interest rates for the 11th time in nearly 15 months and said inflationary pressures in the economy were still strong. It also raised its March-end inflation forecast to 7% from its earlier estimate of 6%.