Food inflation eases marginally but no respite for common man

Food inflation measured by the Wholesale Price Index was 9.55 per cent in the previous week.

Finance Minister Pranab Mukherjee said that inflation has reached the "peak" and hoped it to gradually moderate. However, he admitted that it will take some time before prices of essential kitchen items like onion and potato decline.

"We may have seen the peak as far as monthly inflation rates are concerned with the release of figures for August 2011 yesterday. Here onwards we should see a gradual moderation in monthly headline inflation," Mukherjee said on the social networking site Facebook.

Headline inflation had touched 13-month high of 9.78 per cent in August.
"Inflation in certain commodities like onion and potato are still a concern. The steps that we have taken will have some moderating influence but it is taking time and it will continue for some time," Mukherjee said while talking to reporters.

Onions were dearer by 43 per cent on an annual basis, while potato prices were up 21 per cent, as per latest data.

The government, last week, put a ban on exports of onion, which is available between Rs 10.75 per kg and Rs 12.80 per kg in the wholesale markets here. Retail prices of onion in the NCR region are at Rs 20-25 per kg.

During the week under review, prices of pulses fell by 2.45 per cent year-on-year, while wheat became cheaper by 2.03 per cent. However, other food items became more expensive.

Fruits became 22.64 per cent more expensive and overall vegetable prices shot up by 17.47 per cent.

Milk was dearer by 10.02 per cent, while cereals were up by 5.02 per cent.
The decline is being attributed to high-base effect as the food inflation was over 15 per cent in the corresponding week last year.

Overall, inflation in primary articles was recorded at 13.04 per cent, down from 13.34 per cent in the previous week. Primary articles have a share of over 20 per cent in the WPI.
Inflation of non-food articles, which include fibres, oilseeds and minerals, stood at 18.49 per cent during the week under review compared to 19.88 per cent in the previous week.
Meanwhile, fuel and power inflation went up to 13.01 per cent from 12.55 per cent in the previous week.

"The inflation is on higher side and the worrying part is the increase in index numbers of the non-food articles. The WPI numbers released yesterday also point towards higher inflation in terms of the absolute numbers," financial service firm KASSA director Siddharth Shankar said.

Experts, however, are of the view that despite the latest fall, pressure on the price front continues and is expected to keep the government and the Reserve Bank on their toes.
The Reserve Bank has already hiked policy rates 11 times since March 2010, to tame demand and curb inflation.