Aug. 26: India’s food inflation continued to ease in mid-August, while fuel inflation was flat on the week, but concerns over emerging demand-side pressures on prices will likely see a hawkish central bank hike key rates by 25 basis points when it reviews policy next month.
Analysts say food inflation would further moderate due to good monsoon rains, release of government foodgrains and as the impact of earlier rate hikes trickle through. Data released on Thursday showed the food price index, which has a weightage of over 15 per cent in the WPI, rose an annual 10.05 per cent in the week to August 14, slower than its 10.35 per cent rise in the previous week, as the prices of fruits and pulses have come down.
Food price inflation in India’s widely watched monthly wholesale price index (WPI) eased to 10.29 per cent in July, from near-20 per cent level last December.
“Food inflation is expected to moderate due to good monsoon rainfall and may stabilise around 6 to 7 percent by March,” said Mr N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy, a Delhi-based think tank, before the release of data.