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129550
Fri, 06/25/2010 - 00:49
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Food inflation rises to 16.90 pc
New Delhi, June 24 (PTI) Food inflation in India shot-up
to 16.90 per cent as of June 12 on higher prices of pulses,
vegetables and milk, but any immediate tightening of money
supply by the RBI to arrest the rate or price rise appears
unlikely.
The annual rate of price rise of food items in the
previous week ending June 5 was 16.12 per cent.
Year-on-year, pulses turned dearer by 34.14 per cent,
while milk cost 21.12 per cent more. However, prices of potato
and onion were down by 37 per cent and 22 per cent,
respectively.
Food inflation has pushed core inflation into double
digits (provisionally 10.16 per cent in May), prompting
speculation that the Reserve Bank of India would tighten
monetary policy to temper consumer spending.
"Inflation rate has reached uncomfortable levels.
Therefore, some action is called for. It is for the Reserve
Bank to decide on the timing. But, some action is called for,"
PMEAC Chairman C Rangarajan had said earlier this week,
setting of speculation action could come before the Bank's
July 27 scheduled policy review.
Finance Minister Pranab Mukherjee too had dropped broad
hints that there could be policy action by RBI, saying: "So
far as the monetary part is concerned, the Reserve Bank will
look into it."
However, economists indicated no such immediate action
was warranted as the index was almost unchanged.
"There is no trend ... anxiety is still there. Though
there is change in the composition, index as a whole is at the
same level," Chief Statistician of India Pronab Sen said.
Food inflation has been above the 16 per cent mark for
nine straight weeks.
"Food inflation may start coming down post July ... I do
not expect the Reserve Bank to take any monetary action before
its July meeting," Crisil Principal Economist D K Joshi said.
Mukherjee too had spoken about a good monsoon having a
softening impact on inflation.
Monsoon accounts for 80 per cent of rains India receives,
and 60 per cent of the area under cultivation is rain-fed.
Last year, the country's crop production was hit owing to poor
rains, leading to an upward spiral in food prices.
On a weekly basis, vegetables prices rose by 8.06 per
cent and price of condiments and spices by 3 per cent. Urad,
moong and tea became expensive by 1 per cent each during the
week.
Initially food inflation rose due to sugar, followed by
high prices of horticulture (fruits and vegetables), then
pulses and then foodgrains, which came much later, Sen said.
"Price of pulses and sugar has moderated over the past
several weeks but the easing of prices is still to happen in
horticulture," said Sen, who avoided risking a forecast. MORE
PTI
to 16.90 per cent as of June 12 on higher prices of pulses,
vegetables and milk, but any immediate tightening of money
supply by the RBI to arrest the rate or price rise appears
unlikely.
The annual rate of price rise of food items in the
previous week ending June 5 was 16.12 per cent.
Year-on-year, pulses turned dearer by 34.14 per cent,
while milk cost 21.12 per cent more. However, prices of potato
and onion were down by 37 per cent and 22 per cent,
respectively.
Food inflation has pushed core inflation into double
digits (provisionally 10.16 per cent in May), prompting
speculation that the Reserve Bank of India would tighten
monetary policy to temper consumer spending.
"Inflation rate has reached uncomfortable levels.
Therefore, some action is called for. It is for the Reserve
Bank to decide on the timing. But, some action is called for,"
PMEAC Chairman C Rangarajan had said earlier this week,
setting of speculation action could come before the Bank's
July 27 scheduled policy review.
Finance Minister Pranab Mukherjee too had dropped broad
hints that there could be policy action by RBI, saying: "So
far as the monetary part is concerned, the Reserve Bank will
look into it."
However, economists indicated no such immediate action
was warranted as the index was almost unchanged.
"There is no trend ... anxiety is still there. Though
there is change in the composition, index as a whole is at the
same level," Chief Statistician of India Pronab Sen said.
Food inflation has been above the 16 per cent mark for
nine straight weeks.
"Food inflation may start coming down post July ... I do
not expect the Reserve Bank to take any monetary action before
its July meeting," Crisil Principal Economist D K Joshi said.
Mukherjee too had spoken about a good monsoon having a
softening impact on inflation.
Monsoon accounts for 80 per cent of rains India receives,
and 60 per cent of the area under cultivation is rain-fed.
Last year, the country's crop production was hit owing to poor
rains, leading to an upward spiral in food prices.
On a weekly basis, vegetables prices rose by 8.06 per
cent and price of condiments and spices by 3 per cent. Urad,
moong and tea became expensive by 1 per cent each during the
week.
Initially food inflation rose due to sugar, followed by
high prices of horticulture (fruits and vegetables), then
pulses and then foodgrains, which came much later, Sen said.
"Price of pulses and sugar has moderated over the past
several weeks but the easing of prices is still to happen in
horticulture," said Sen, who avoided risking a forecast. MORE
PTI
