Food inflation soars again

Dec 30, 2010 |

IANS

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New Delhi: Soaring prices of onions, fruits, vegetables, milk, eggs, meat and poultry sharply pushed India's annual food inflation based on wholesale prices to 14.44 per cent for the week ended December 18 from 12.13 per cent for the week before.

This was the fourth straight week of rise in food inflation rate, which was pushed back to double-digits during the previous week, as per weekly data on wholesale price index for primary articles and fuels released by the commerce and industry ministry on Thursday.

The fresh data reflects the high onion prices due to crop failure in the main growing regions in Maharashtra which had caused a nationwide furore last week, resulting in a slew of steps like a ban on export of the tuber and zero customs duty on imports.

The following are the yearly rise and fall in prices of some main commodities that form the sub-index for food articles:

Onions: 39.66 per cent

Vegetables: 29.26 per cent

Fruits: 21.97 per cent

Potatoes: (-)23.84 per cent

Milk: 17.75 per cent

Eggs, meat, fish: 20.34 per cent

Cereals: (-)0.70 per cent

Rice: 0.73 per cent

Wheat: (-)5.51 per cent

Pulses: (-)10.79 per cent

Both Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee have expressed major concern over the high price line and have assured people that the annual inflation rate will fall to around five per cent by the end of this fiscal.

Tuesday saw the empowered group of ministers on prices headed by Mukherjee extend the ban on export of pulses indefinitely, and decide to release additional five million tonnes of wheat and rice to be sold through state-run fair price shops.

Earlier this month, the central bank, in its mid-quarter review of its monetary policy, kept almost all rates intact, but lowered the amount banks have to retain in the form of bonds, gold and cash to ease liquidity in the system.

The move indicated that the Reserve Bank of India (RBI) was expecting the inflation rate to temper and wanted to make more credit available to industry to ensure that growth does not suffer for want of funds.

But with inflation back in double-digit levels, RBI Deputy Governor Subir Gokarn has hinted at some tightening of monetary policy.

"Inflation is not easing as we would like it to be. Upside risks are still high," he said.

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