Food inflation falls to 6.6%

Food inflation fell sharply to 6.60 percent for the week ended November 26, reflecting a decline in prices of essential items like vegetables, onions, potatoes and wheat.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8 percent in the previous week ended November 19. It was recorded at 8.93 per cent in the corresponding period last year.

According to data released by the government Thursday, onions became cheaper by 39.20 percent year-on-year during the week under review, while potato prices were down by 15.75 percent. Prices of wheat also fell by 4.70 percent.

Overall, vegetables became cheaper by 1.25 percent, a big relief after double-digit inflation in vegetable prices during the months of September and October.

However, other food products grew more expensive on an annual basis, led by protein-based items.

Pulses became 13 percent costlier during the week under review, while milk grew dearer by 11.02 percent and eggs, meat and fish by 10.04 percent.

Fruits also became 10.72 percent more expensive on an annual basis, while cereal prices were up by 1.68 percent.

Inflation in the overall primary articles category stood at 6.92 percent during the week ended November 26, as against 7.74 percent in the previous week. Primary articles have over 20 percent weight in the wholesale price index.

Inflation in the non-food segment, which includes fibres, oilseeds and minerals, was recorded at 1.37 percent during the week under review, as against 2.14 percent in the week ended November 19.

The rate of price rise in non-food primary articles has fallen sharply during the past couple of months, from over 8 percent to around 1 percent, as per the latest numbers.

Fuel and power inflation stood at 15.53 percent during the week ended November 26, the same as in the previous week.

The decline in the rate of price rise in food items is likely to bring some relief to the government and the Reserve Bank, which have been facing flak from all quarters for persistently high prices.

Speaking in the Lok Sabha yesterday, Finance Minister Pranab Mukherjee said the ideal rate of inflation is around 5-6 percent.

The fall in food inflation comes as a silver lining for the government at a time when the economy is experiencing a slowdown, with GDP growth dipping to 6.9 percent in the second quarter, the lowest rate of expansion in over two years.

The eight key infrastructure industries witnessed dismal growth of 0.1 percent in October, the lowest in the past five years.

Headline inflation, which also factors in manufactured items, has been above the 9 percent-mark since December, 2010. It stood at 9.73 percent in October this year.

The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation.

In its second quarterly review of the monetary policy last month, the central bank had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7 percent by March, 2012.