Dip in food inflation fails to tame prices
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Jan. 20: Food price inflation, which measures the rate at which food items are becoming costlier, fell slightly to 15.52 per cent for the week ended January 8. However, while inflation may have fallen, prices are still high.
In a break from the past, government officials have refrained from putting deadlines by which food prices would fall. The finance minister did however, claim some credit for the drop in the headline food inflation figure over the previous week. Economists say that in the coming months, inflation – which measures the rate of prices rise — may fall, but food prices are going to remain high. Compared to the last year, prices of vegetables and onions are up by 65 per cent and 90 per cent respectively. Prices of other food items such as fruits, milk and meat are up 12-15 per cent.
“Earlier, the jump in prices of fruit and vegetables used to be because of seasonal factors, and prices used to correct as new supplies hit the market,” says Mr Sunil Sinha, economist with Crisil. “That is not happening this time. The seasonal supply is going up but the prices are not falling which is a worrying factor. Inflation which we are witnessing is not just seasonal,” he adds.
“The figure is lower than last week’s, but the drop isn’t very significant,” says Mr. Arun Singh, economist with Dun and Bradstreet. “The next few months should see inflation numbers moderate as the high base effect sets in, but prices are likely to remain high,” he says. He expects the Reserve Bank of India to raise policy rates in the forthcoming credit policy next week.
Meanwhile, the Planning Commission deputy chairman Dr Montek Singh Ahluwalia, said on a television channel that he expects the headline inflation figures — measured by wholesale price index, to fall to 6-6.5 per cent by the year end.
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