Food inflation back at 9%, surges to 10-week high

New Delhi: Food inflation has shot up to 9.01 percent for the week ended May 28 due to costlier fruits, onions and protein-based items. The latest jump in food inflation numbers comes in the wake of a slew of bad news for the economy. GDP growth slowed to a five-quarter low of 7.8 percent during the January-March quarter, while the six core industries registered a meagre 5.2 percent expansion in April. [caption id=“attachment_22794” align=“alignleft” width=“380” caption=“Food prices have shot up by 30.78 percent year-on-year, while onions are up by over 14 percent. Reuters”]  [/caption] For the past two months, the rate of price rise has been below the 8 percent mark. However, the latest figure is the highest level of food inflation since the week ended March 26 when it had stood at at 9.18 percent. Food inflation, as measured by the Wholesale Price Index (WPI), was 8.06 percent in the previous week, while it was as high as 20.62 percent during the last week of May, 2010. Inflation in the fuel and power space inched lower during the week under review, the data revealed. According to the data released by the government today, food prices have shot up by 30.78 percent year-on-year, while onions are up by over 14 percent. During the week under review, milk prices were up 8.49 percent and egg, meat and fish became dearer by 6.99 percent. Cereals also became costlier by 5.77 percent on an annual basis. However, the prices of pulses went down by 9.49 percent year-on-year, while vegetables and potatoes became cheaper by 0.20 per cent and 2.87 per cent. Inflation in overall primary articles, which have a weight of 20 percent in the headline WPI, was reported at 11.52 per cent during the week under review, up from 10.87 per cent in the previous week. However, inflation of non-food primary articles fell to 20.97 percent, against 21.31 percent in the previous week. This is likely to bring some cheer to the government and the Reserve Bank, who have termed inflationary pressure from the core (non-food) segment as the biggest threat to the economy in the near future. In the non-food segment, fibres became dearer by 56.56 percent year-on-year, while minerals were up 12.11 percent. Fuel and power became more expensive by 12.46 percent and petrol by 33.23 percent on an annual basis during the week under review. The government and RBI had said that in the months to come, inflationary pressure would be more from core (non-food) items on account of high global prices of commodities, particularly crude. A rise in prices of food items was the main reason for inflationary pressure during 2010. Food inflation was in double digits for most of last year, before showing signs of moderation from March this year. Food inflation had fallen to an 18-month low of 7.47 percent in the first week of May. However, the prospects for a prolonged moderation now seems to have vanished. Headline inflation stood at 8.66 per cent in April. The RBI, in its monetary policy for 2011-12, had projected that overall inflation would average 9 per cent during the first half of this fiscal. Experts had blamed inflation and the resultant rate hikes by the RBI, which resulted in slowing down of investment, for the poor economic growth numbers. The RBI is expected to go for another round of rate hikes at its mid-quarterly review next week. PTI