Food inflation dips to 8.84 pc, but no respite for common man

New Delhi, Sep 22 (PTI) Food inflation dipped to a
seven-week low of 8.84 per cent for the week ending September
10, but pricier kitchen staples onions, potatoes and milk
continued to pinch the common man.
Food inflation, as measured by the Wholesale Price Index
(WPI), stood at 9.47 per cent in the previous week. It was
16.30 per cent in the corresponding week of 2010.
As per the Commerce Department's data, except for wheat,
prices of all other food items were up year-on-year during the
week under review. Wheat prices slumped by 2.72 per cent on an
annual basis during the week ended September 10.
Onions became 29 per cent more expensive and potatoes
13.78 per cent costlier. On an average, the vegetables basket
became 12.13 per cent dearer, while the price of milk shot up
by 10.38 per cent.
Fruit prices went up by 17.67 per cent year-on-year.
Similarly, prices of protein-rich egg, meat and fish were up
9.28 per cent. Even the prices of pulses, which were on the
decline in recent weeks, firmed up by 1.49 per cent.
The fall in inflation numbers on a weekly basis despite a
rise in prices of most commodities, experts said, is due to
the "high base effect", as food inflation was over 16 per cent
in the same period last year.
"The high base has a big role to play in the moderation.
However, it is also true that during recent weeks, there has
been lot of volatility in the food inflation numbers," Crisil
Chief Economist D K Joshi said.
Overall inflation in primary articles stood at 12.17 per
cent for the week ended September 10, as against 13.04 per
cent in the previous week.
Non-food articles, like fibres, minerals and oil seeds,
recorded 17.42 per cent inflation during the seven-day period
under review, down from 18.49 per cent in the previous week.
Meanwhile, inflation in the fuel and power segment went
up to 13.96 per cent during the week ended September 10 from
13.01 per cent in the previous seven-day period.
"We believe that vegetable prices will moderate after the
retreat of the monsoon is over and this may help stabilise
food inflation at below the double-digit mark for the rest of
the fiscal," Joshi said.
Economists also said that a normal monsoon will help in
moderating the rate of price rise.
"On a sequential basis, inflation in food articles has
risen, but going forward, once the crops hit the market, this
number will fall," financial services firm KASSA director
Siddharth Shankar said.
However, the prevailing high inflation in non-food items
is a cause for concern, he said.
"Rise in non-food articles index number on a sequential
basis is disturbing as it will continue to add to the input
costs of industry and this would hit their profitability in
the coming quarters," Shankar said.
The RBI has already hiked its key policy rates 12 times
since March, 2010, to tame demand-side inflation. Headline
inflation stood at a 13-month high of 9.78 per cent in August.
India Inc has complained against the frequent rate hikes,
which have increased their cost of borrowing, and said this
has resulted in a decline in investment and a slowdown of the
economy.
Economic growth stood at 7.7 per cent in April-June,
2011, the slowest growth rate in six quarters. Industrial
output growth also slowed to a 21-month low of 3.3 per cent in
July.