Food inflation at 19.95%, RBI may hike rates

New Delhi, Dec 17 (PTI) Food inflation in India touched
more than a decade's high of 19.95 per cent as of December
five, driven by costlier vegetables, pulses, milk, wheat and
rice, even as economists said they expected Reserve Bank of
India to hike rates to tame price rise.
On an annual basis, potato prices more than doubled at
136 per cent and pulses became costlier by over 40 per cent,
while onion prices rose 15.4 per cent.
Other food items that became dearer include wheat 14 per
cent), milk (13.6 per cent), rice 12.7 per cent) and fruits
(11 per cent).
Food price inflation was triggered by a short supply of
essentials owing to lower farm production following drought
and floods in different parts of the country during the year.
The comprehensive wholesale price inflation, which
includes manufactured products in addition to food and fuel
items, soared to 4.78 per cent in November from 1.34 per cent
in October.
"By the end of March 2010, it (inflation) could be close
to seven per cent," Indian Prime Minister's Economic Advisory
Council chairman C Rangarajan had said earlier this week.
"We need to watch for behaviour of prices in December...
possibly some action will be taken (by the RBI), which can
have a moderating effect (on inflation)," said Rangarajan, a
former RBI governor.
The RBI, which keeps a close watch on inflation and
growth, is slated to come out with third quarterly review of
monetary policy on January 29, 2010.

RBI had earlier projected inflation towards the year-end
at 5 per cent, but later raised it to 6.5 per cent.
Finance Minister of India Pranab Mukherjee too has said
rising inflation was a matter of concern. "There is
inflationary pressure, particularly in the food items. Even
the wholesale prices have gone up substantially, about 19 per
cent inflation (food)."
Food inflation in the last week of November stood at
19.05 per cent.
On a weekly basis, the spike in prices was significant
with urad and spices rising by 3 per cent while milk rose by
two per cent. At the same time, maize, barley, pork, masur and
wheat was costlier by one per cent each.
However, the prices of poultry chicken declined by 10
per cent and tea by 2 per cent.
Among the non-food articles, raw jute turned expensive
by 11 per cent and mustard seed by 4 per cent.
The fuel index declined during the week due to lower
prices of aviation turbine fuel. PTI DP
RDM