Food Inflation Below Psychological 5% Mark, At 4.35% For Week Ended Dec 3
Posted by Labels: Food Inflation, India
India's weekly food inflation, measured by the Wholesale Price Index (WPI), fell to a nearly four-year low of 4.35% for the week ended December 3, the fifth successive decline and the lowest rate of food inflation since the week ended February 23, 2008. The decline was mainly on the back of reducing prices of onion, potato, vegetables and egg, meat and fish. The easing of food inflation is in line with the government’s expectations.
According to the data released by the Ministry of Commerce and Industry, the index for 'Food Articles' group declined by 1.0% to 191.9 (Provisional) from 193.8 (Provisional) for the previous week due to lower prices of fruits and vegetables (4%), poultry chicken and urad (3% each) and ragi, gram, barley, tea, condiments and spices and arhar (1% each). However, the prices of pork (6%), beef and buffalo meat and jowar (2% each) and bajra, fish-inland and maize (1% each) moved up.
The index for 'Non-Food Articles' group rose by 0.4% to 178.4 (Provisional) from 177.7 (Provisional) for the previous week due to higher prices of flowers (6%), gaur seed and linseed (5% each), raw rubber (4%), niger seed and raw silk (3% each), rape and mustard seed (2%) and sunflower (1 %). However, the prices of gingelly seed and castor seed (3% each), fodder (2%) and coir fibre, soyabean, copra and groundnut seed (1% each) declined.
As a result the index for 'Primary Articles' which accounts for 20.12% of the WPI declined by 0.6% to 198.1 (Provisional) from 199.3 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 5.48% (Provisional) for the week ended December 3, as compared to 6.92% (Provisional) for the previous week.
Meanwhile, the index for 'Fuel and Power' group, which accounts for 14.91% of WPI, rose by 0.3% to 172.4 (Provisional) from 171.8 (Provisional) for the previous week due to higher prices of aviation turbine fuel and bitumen (4% each) and naphtha and light diesel oil (3% each). However, the prices of petrol and furnace oil (1% each) declined. The annual rate of inflation, calculated on point to point basis, stood at 15.24% (Provisional) for the week ended December 3 as compared to 15.53% (Provisional) for the previous week.
Further, Chief Economic Adviser Kaushik Basu had expressed hope that food inflation may fall below 3% in a month's time. 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% in the second quarter, the lowest rate of expansion in over two years. Industrial production has also witnessed a contraction, with output shrinking by 5.1% in October.
Just a day before the Reserve Bank of India's monetary policy review, weekly food inflation coming less than 5% mark is a big relief to the government and the policy maker, who have been facing criticism from all quarters for persistently high prices. The RBI, in its second quarter review of the monetary policy last month, had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7% by March 2012.
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