Food inflation rises to 8.55%

Food inflation rises to 8.55%

The food inflation, as measured by the Wholesale Price Index (WPI), was on a declining mode for the previous three weeks.

Food inflation rose by a hefty 1.08 percentage points during the week under review from 7.47 per cent in the previous week, official data showed. On an annual basis, prices of primary articles went up by 23.22 per cent. Food inflation remained in double digits for most of 2010, before showing signs of moderation from March, 2011.

The sudden spurt in food inflation is primarily due to escalation in prices of fruits, cereals and protein-based food items like milk and egg.

Analysts apprehend that food inflation in coming weeks is likely to go up as the impact of steep hike in petrol price, which was effected on May 14, is yet to be factored in.

Besides, food inflation is also likely to move up further if the government decides to raise the price of diesel, which appears imminent in the face of rising global crude oil price. Any hike in diesel price always exerts a cascading effect on the overall price line.

Analysts say further firming up of food inflation coupled with rising prices of manufactured items will fuel the overall inflation level, which is now hovering above 8 per cent—much above the tolerable level of 4 to 5 per cent prescribed by the RBI.

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