Jan. 27: Food inflation, which measures the pace of rise in agri-commodities accelerated marginally for the week ended on January 15 to 15.57 per cent due to high vegetable prices. The increase is due to hike in vegetable prices, which rose by 67 per cent on year-on-year basis, particularly of onion which was up by more than 100 per cent.
There has been some relief in onion prices in the recent days, which will be reflected in the inflation data in the coming days. Experts feel that prices of essentials will stay above the comfort zone, and that the Reserve Bank could act by hiking policy rates. “Food inflation may come down to single digits within this month as vegetable prices have started softening,” said Crisil, chief economist, Mr D.K. Joshi. Food inflation was 15.52 per cent for the week ended January 8.
However, the consumers are unlikely to get any relief from overall inflation due to increase in prices of raw material, minerals and oil in coming days. “High global energy, global commodities and domestic food prices are likely to have a significant impact on inflation outlook in 2011,” said the Reserve Bank of India deputy governor, Mr Subir Gokarn. The Food and Agriculture Organisation (FAO) has also sounded a warning a week ago that food prices world-wide may harden during 2011, intensifying global inflationary pressures.
“This is going to reinforce the already existing food price pressure we have in the domestic market,” said Mr Gokarn. The RBI is expected to act tough in coming days to prevent spill over of food inflation to the manufactured products. “We expect the RBI to hike interest rates by 0.50 per cent in this calendar year,” said Mr Joshi.
This week RBI had increased the interest rates by 0.25 per cent. RBI had also revised its current fiscal year-end projections for inflation, raising it to 7 percent from the earlier 5.5 per cent.