Food inflation dips to 18-month low at 8.6%
Dec. 2: Food inflation, which measures the pace of increase in prices, slipped to single-digit at 8.60 per cent for the week ending on November 20 as kharif crops hit the market. It is for the first time in four months that the food inflation has dropped to single digit.
The last time the food inflation was in single digit at 9.53 per cent was on July 24 this year. It was at 10.15 per cent in the previous week. Dearer food articles were pushing the overall inflation high.
The government that has been under pressure due to high food prices hoped the food inflation will further come down in the coming days. “Decrease in food inflation is good... I hope it would come down further,” said finance minister, Mr Pranab Mukherjee.
Finance secretary Mr Ashok Chawla said that overall inflation is now likely to fall to 5.5 per cent by March 2011.
“The decline in the food inflation numbers is in line with what had been projected but the sudden decline that we have seen is more due to the base effect. Looking at the food inflation in details, my view is that prices of pulses, grains and vegetables will continue to decline but I do not see a fall in prices of items like egg, meat, milk and fish,” said Mr Siddharth Shankar, director, KASSA. He said that while food inflation will decline in the coming days, there is unlikely to be a sharp decline in overall inflation. “The hot money in the system will keep the overall inflation numbers on the higher side. RBI will have to tread a very thin line of controlling money supply in view of the fact that some of the western economies have still not picked up,” added Mr Shankar.
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