Costlier food pushes inflation up at 0.57 per cent

New Delhi, Apr 30 (PTI) Prices of essential food items
continued to rise pushing up the benchmark inflation to 0.57
per cent for the week ended April 18, but still remained close
to a three-decade low.

The rise in prices may not augur well for the government
of the day in the midst of election season.

While the prices of rice bran oil was up by 11 per cent,
'khandsari' and cotton seed oil prices rose by eight per cent
each during the week under consideration.

Tea became costlier by seven per cent, urad prices went
up by five per cent and condiments and spices by four per
cent, as per the data released by the government.

Predictions of whether or not inflation would slip below
zero continued to prevail with some analysts saying that owing
to a high base it is bound to fall into negative zone.

The rise in inflation over the previous week is just a
blip and inflation is expected to go down, D K Joshi,
Principal Economist at ratings agency Crisil, said and added
that he didn't see any further upside in food prices.

However, Suresh Tendulkar, Chairman of Prime Minister's
Economic Advisory Council, is not of the same view. "I don't
see inflation going below zero," he said.

As per the data year-on-year, the prices of cereals
increased 10.29 per cent, pulses 12.62 per cent, vegetables
9.91 per cent, fruit 8.03 per cent, milk 5.46 per cent and
condiments and spices 9.13 per cent.

Among manufactured food products, prices of processed fish
shot up by 42.75 per cent, sugar rose by 22.49 per cent and
common salt by 12.35 per cent.

Prices of oil cakes rose by 25.66 per cent, tea and coffee
by 14.44 per cent and malt liquor by 25.40 per cent.

Prices of aviation turbine fuel went up by 8 per cent,
furnace oil by 2 per cent and metallic minerals saw a price
surge of 25 per cent over the previous week.

This is the seventh week in a row that inflation has been
below one per cent.

The Reserve Bank in its monetary policy statement on April
21 said any expectation of negative inflation has only
statistical significance and is not a reflection of demand
contraction.

Warning that the trend should not be treated as deflation
for monetary policy purposes, the RBI had said the transitory
WPI inflation in negative zone may not persist beyond the
middle of 2009-10.

In the policy, the central bank had cut its short-term
lending (repo) and borrowing (reverse repo) rates by 25 basis
points each, lower than the market expectation, reflecting a
cautious approach in the backdrop of rising food prices. PTI