Food inflation dips down

16 December 2011: In a much-needed relief to consumers and comfort for the government, which has been battling the price spiral for over 18 months, food inflation slumped to nearly a four-year low at 4.35 per week ended 3 December 2011 following a significant fall in prices of wheat and vegetable owing to seasonal factors. Coming a day ahead of the Reserve Bank's monetary policy review on 16 December 2011, the marked moderation in WPI (wholesale price index) food inflation from 6.6 per cent in the previous week has raised hopes of at least a pause, if not an easing, in key rate hikes, as indicated by the apex bank earlier, so as to catalyse investor sentiment and spur industrial growth. The shift in sentiments towards pro-growth measures, however, is despite the fact that the latest WPI data have the cushion of a favourable base — food inflation was at 10.78 per cent in the like week of 2010 — and headline inflation in November still remains unacceptably high at 9.11 per cent.

As per the weekly WPI data, while vegetables, on the whole turned cheaper by 12.28 per cent, prices of kitchen staples such as onions and potatoes slumped by 46.03 per cent and 33.28 per cent on a year-on-year basis. What prices also eased by 4.43 per cent.

Source: The Hindu