Food inflation touches 17.56%

Feb 04, 2010

Mumbai, Feb. 4: Food price inflation for the week ended January 23 stood at 17.56 per cent, up compared to the last week. However, this is lower than the value earlier in the year, when the figure was close to 20 per cent.

The high value seems to be because of two commodities — potatoes and pulses — which are up 40 per cent compared to the last year.

High food prices could put in spanner in the works for the plan to raise fuel prices and free up the oil sector.

A hike in diesel prices affects food prices because diesel is used as a farm input — for driving tractors and pumps. Also, it is the major transport fuel in India, so costs are also affected on that front.

"There is a strong relationship between diesel prices and transport costs," says Mr Mridul Sagar, eco-nomist with Kotak Secur-ities. "Whether to raise the prices or not is a choice that the government has to make, as it needs to cut the fiscal deficit too," he adds.

Age Correspondent

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