Food inflation dropped marginally to 16.12 per cent for the week ended June 5 raising hopes that prices might go down further as indicated by the finance minister, Mr Pranab Mukherjee.
A 0.62 percentage point decline in food inflation over 16.74 per cent in the previous reporting week would also ease pressure on the Reserve Bank to take immediate policy measures to tame rising prices.
The food inflation declined mainly due to softening of prices of fruits, vegetables and tea.
Mr Mukherjee, earlier in the week, had expressed the hope that food prices would decline by mid-July in view of the likelihood of a good monsoon.
Monsoon accounts for 80 per cent of the annual rains the country receives. Nearly 60 per cent of area under cultivation is rain fed.
The weather office has predicted near normal monsoon this year, although it has been slow to advance since hitting the Indian coast in late May.
“Inflationary pressure would start coming down,” he said.
Experts, too, are of the opinion that decline in food prices would depend mainly on the performance of the monsoon.
Economists believe food inflation is going to remain volatile for few more weeks till there is clarity on the monsoon front and the current liquidity scenario will prevent Reserve Bank from raising rates before its policy review on July 27th.
— PTI