Food inflation eases to four-year low

Food inflation was 4.35 per cent in the previous week, down from as high as 13.22 per cent in the same period a year ago.

 Official data showed a near 50 per cent decline in onion prices and close to 35 per cent decline in prices of potato helped food inflation come down sharply. Prices of wheat also fell by 4.21 per cent in the week under review. However, protein-based items grew expensive with pulses staying 4.22 per cent costlier, while milk grew dearer by 11.19 per cent and eggs, meat and fish by 9.25 per cent.

 Fruits also became 8.89 per cent more expensive on an annual basis. Inflation in the overall primary articles category stood at 3.78 per cent during the week ended December 10, as against 5.48 per cent in the previous week. Analysts expect the food inflation rate to ease further and could slip below 1 per cent in the next few weeks, helped by seasonal factors and a comparison with high base last year.

India’s headline inflation remained above 9 per cent for 12 months running through November, with the RBI Financial Stability Report brought out on Thursday saying that India’s inflation risk still remains high and a slowdown in revenue collections and higher spending on subsidies may make it challenging for the government to achieve the fiscal deficit target of 4.6 per cent this year.

A sharp fall in the Indian rupee against the US dollar has added to the inflation pressure as import costs have ballooned, widening the trade deficit. India’s economic growth also slowed to 6.9 per cent in the July-September quarter, lowest in more than two years. But, economy watchers say, the declining inflation in food, will help the government and RBI to focus on growth parameters.