India's Food Inflation Rate Eases

RTTNews) - India's food inflation rate fell marginally to 9.42 per cent for the week ended
March 5, led by a decline in the prices of vegetables and milk.
Annual inflation rate of food article prices, as measured by the wholesale price index, or
WPI, (with base year 2004-05) for the week ended March 5 dropped marginally to 9.42 per
cent from 9.52 in the preceding week.
Percentage of inflation for the corresponding week in the preceding year was 20.59 per cent.
The 52-week average inflation for the week ended March 5 was 16.27 per cent, according to
data released by the Ministry of Commerce & Industry.
Annual percentage of inflation for "Non-Food Articles" dropped to 23.03 per cent from 29.85
per cent in the preceding week. The 52-week average inflation for the week ended March 5
was 21.12 per cent.
Primary articles
Annual rate of inflation for the week ended March 5 was 12.31 per cent, lower than 13.96 per
cent of the preceding week. It was 22.29 per cent for the corresponding week of the preceding
year. The 52-week average inflation for the week was 18.13 per cent, the data said.
The index for this group, with a weightage of 20.12 per cent, remained unchanged at its
previous week's level of 186.1.
These groups and items showed variations:-

Higher prices of maize, fruits and vegetables, egg, urad, rice and condiments and spices
pushed up the index for "Food Articles" by 0.22 per cent. However, the prices of chicken,
mutton, gram, fish-inland, milk, jowar, barley, fish-marine and masur declined.

The index for "Non-Food Articles" declined by 0.54 per cent due to the lower prices of raw
silk, castorseed, copra, hides, sunflower, gingellyseed, coir fibre, raw rubber and groundnut
seed, while those of gaurseed, fodder, rapeseed and mustardseed and flowers moved up.

Fuel, Power, Light & Lubricants

Annual rate of inflation under this category was 12.79 per cent, higher than the 9.48 per cent
of the preceding week. The 52-week average inflation for the week was 12.30 per cent, the
data said.

Index for this major group carrying a weightage of 14.91 per cent rose by 3.61 per cent on
higher prices of coking coal, non-coking coal, lignite, furnace oil, aviation turbine fuel,
naphtha, light diesel oil and bitumen.

The Reserve Bank of India (RBI) in its Mid-Quarter Monetary Policy Review on Thursday
increased the repo rate and reverse repo rate by 25 basis points each with immediate effect to
check inflation. The repo rate has been increased to 6.75 per cent from the 6.5, while reverse
repo raised to 5.75 per cent from the 5.5.

(RTTNews) - RBI, in its Third Quarter Review, had projected year-on-year WPI inflation for
March 2011 at 7 percent. Now the apex bank has estimated the inflation to be higher at
around 8 per cent.
The RBI said the policy action in this Review was expected to continue to rein in demand-
side inflationary pressures while minimizing risks to growth and manage inflationary
expectations and contain the spillover of food and commodity prices into more generalized
inflation.Based on the current and evolving growth and inflation scenario, the apex bank is
likely to persist with the current anti-inflationary stance.

Food inflation declines marginally to 9.42 per cent

ENS Economic BureauTags : Food inflation, Reserve Bank of India
(RBI),Crisil, inflationary pressures
Posted: Fri Mar 18 2011, 23:16 hrs New Delhi:

Food inflation declined marginally to 9.42 per cent for the week ended March 5 against 9.52
per cent during the previous week with prices of potatoes, pulses, non-food articles, onion
and protein-rich items such as meat and eggs softening week-on-week.
According to data released by the government today, prices of pulses declined by 0.42 per
cent while that of potatoes eased by 1.18 per cent, onion by 11.36 per cent and egg, meat and
fish by 1.46 per cent on a weekly basis.
However, on an yearly basis, protein-rich items like milk, egg, meat and fish turned
expensive.
Experts said that though the inflation in food items has eased off, it is now the non-food items
that will face the inflationary pressures. Though non-food items like fuel became cheaper by
0.54 per cent week-on-week, on an yearly basis, prices have increased by over 23 per cent
and are expected to go up further with the situation of unrest in the Middle East and North
African region.
The international crude price soared to a 30-month high of $120 per barrel two weeks back
and is ruling at $100 barrel currently.

Meanwhile, the headline inflation for the month of February rose to 8.31 per cent, forcing the
Reserve Bank of India (RBI) to raise its inflation forecast for the March-end at 8 per cent
from the earlier projection of 7 per cent in its monetary policy review today. The central bank
also raised the key policy rates by 25 basis points each to rein in the rising prices.

DK Joshi, chief economist, Crisil, said, “Now the main pressure will be from non-food items
like fuel. The moderation in price rise of food items is likely to persist”.

During the week, prices of cereals, rice, wheat continued to rise by 1.16 per cent, 1.27 per
cent and 0.23 per cent respectively.While price of fuel and power rose by 3.61 percent during
the week. On an annual basis, cereal prices rose by 3.88 per cent on, rice prices by 2.75 per
cent while wheat prices rose by 0.69 per cent.

Earlier, the government had said that the expected bumper yield of crops like wheat and
pulses will help stabilise the spurt in food prices.Vegetables became dearer by 8.71 per cent,
while fruit prices rose by 19.39 per cent year-on-year. Milk became expensive by 7.16 per
cent, while prices of egg, meat and fish prices went up by 13.10 per cent.