Food inflation to ease in two weeks

New Delhi, July 16: Food inflation will substantially ease in the next two weeks, but non-food inflation is accelerating, Mr Kaushik Basu, chief economic adviser at the finance ministry, said on Friday.

India’s food inflation edged up to 12.81 per cent in the year to July 3 from 12.63 per cent in the previous week, snapping a two-week easing trend, on higher rice and wheat prices, data showed on Thursday.

“It is reasonable to predict that the food price inflation that will be announced 2 weeks from now, that is, on Thursday, 29th July, will be substantially lower than what the inflation is right now,” Mr Basu said.

The government, facing political protest against soaring prices, has been pinning its hopes on good summer rains to cool down food prices, which will help ease the double-digit headline inflation.

But the weather office on Thursday said monsoon rains were 24 per cent below normal in the past week and unlikely to rebound in the week ahead, raising fears of crop loss.

Earlier on Friday, the agriculture minister, Mr Sharad Pawar, said weak monsoon rains in the past week will not significantly hurt crop output in the country and the weather outlook was encouraging.

India’s headline inflation quickened to 10.55 per cent in June, holding in double digits for the fifth straight month and cementing expectations that the central bank will raise interest rates for a second time this month to contain surging prices.

The RBI, which had lifted policy rates by a quarter point in its third hike this year, is expected to raise rates by another 25 basis points at a policy review on July 27.

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