Food inflation up at 3-month high of 9.9%

TNN Aug 12, 2011, 02.20am IST

NEW DELHI: Costly onion, fruits, vegetables and protein-based items pushed food inflation to a three-month high in late July, highlighting the extent of price pressures in the economy and posing another challenge for policymakers.

Data released by the commerce and industry ministry on Thursday showed the wholesale price index for food articles rose an annual 9.90% in the week to July 30, rising from 8.04% in the previous week. Food prices had displayed tentative signs of easing in the previous months but have remained volatile. The data showed onion prices rose an annual 36.62% while the weekly trend showed prices of vegetables, potatoes, fruits, eggs, meat and fish have remained firm.

A sharp increase in the prices of onion last year had pushed food inflation into double-digits and had emerged as a policy headache for the UPA government which is battling a slew of corruption charges. Policymakers have been consistently wrong footed on inflation in the recent past.

The index for food articles group rose by 1.6% to 195.3 from 192.2 for the previous week due to higher prices of fish-inland (17%), poultry chicken and fish-marine (4% each), ragi and fruits & vegetables (2% each) and rice, coffee and gram (1% each).

"For a couple of weeks, rainfall has been deficient and that could have led to some short-term price pressures," said Samiran Chakraborty, economist at Standard Chartered Bank. Economists say it is difficult to draw any sweeping conclusions from sharp fluctuations in weekly food inflation data.

Chakraborty said the Reserve Bank of India was unlikely to reverse its monetary policy stance soon and the central bank would carefully watch the movement of global commodity prices. "They have to be convinced that there is a sustained and continuous fall in commodity prices, only then can they reassess their monetary policy stand," he said.

Expectations of a pause in the central bank's monetary tightening had gathered pace after downgrading of US debt by ratings agency Standard & Poor's sparked off fears of a global economic slowdown and spooked financial markets.

The RBI has raised interest rates 11 times since March 2010 and has said it is ready to sacrifice some growth in the short-term to tackle stubbornly high inflation. Inflation, as measured by the wholesale price index, hovers around 9% now and some economists say there could be a period when it could hit double-digits and then start easing by October-November. Policymakers expect inflation to be around 7-8% by end-March 2012.

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Dearer vegetables, fruits push inflation up to 9.90%

Business Line : Markets / Commodities : Inflation surge dims hopes of rate hike pause SEARCH HomeCompaniesMarketsIndustry & EconomyOpinionFeaturesToday's PaperTopicsGet quote: Stock MarketsCommoditiesToday's PickGoldForex Inflation surge dims hopes of rate hike pause Our BureauShare??·??Comment??·??print ??·?? New Delhi, Aug. 11:?Food inflation surged sharply to its highest levels since mid-March, leaving little room for the RBI to soften its anti-inflationary stance despite moderating economic growth and indications of a global slowdown.

The annual Wholesale Price Index-based food inflation rose 9.9 per cent during the week ended July 30, sharply up from the previous week's annual level of 8.04 per cent. While this was largely on account of the base effect, products such as onions, fruits, vegetables and protein-based items too contributed to the surge. The rate of inflation in food items was recorded at 16.45 per cent in the last week of July 2010.

The RBI has already raised interest rates 11 times since March 2010 to tame headline inflation, which had surged to 9.44 per cent in June. Analysts expect headline inflation to remain above 9 per cent until October.

“A reversal in the RBI's monetary stance and focus on inflation management in the near term is unlikely, unless there is a sharp and sustained downtrend in commodity prices,” said Ms Aditi Nayar, an economist with ICRA. The RBI will meet on September 16 for its mid-quarter policy review.

Not acceptable: PranabWinding up the debate on the first batch of supplementary demands for grants in the Rajya Sabha, the Finance Minister, Mr Pranab Mukherjee, referring to the concerns on inflation, said, “If it is 9 per cent it is not acceptable. It (inflation) would have been ideal at 3.5 to 4 per cent ...even if we can keep it at 5-6 per cent (it will not be bad).”

anil@thehindu.co.in

Keywords: Food inflation,?costlier vegetables,?fruits,?WPI

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Inflation up at 8.98% on costlier vegetables, fuels

Business Line : Markets / Commodities : Inflation up at 8.98% on costlier vegetables, fuels QuickLook: ArchivesSubscriptionRSS FeedsSite MapePaperSocialBL Club SEARCH  HomeCompaniesIndustry & EconomyOpinionMarketsFeaturesToday's PaperTopicsStock MarketsCommoditiesToday's PickGold Inflation up at 8.98% on costlier vegetables, fuelsOur BureauShare??·??Comment??·??print??·?? New Delhi, April 15:?Inflation, based on the annual Wholesale Price Index, rose faster than expected in March to 8.98 per cent on higher prices of vegetables, fuels and manufactured products.

The March reading was well above the Reserve Bank of India's inflation projection of 8 per cent for the last month of fiscal 2010-11, adding pressure on the central bank to tighten its monetary policy. The latest estimate was also sharply higher than the year-on-year increase of 8.31 per cent recorded in February.

JANUARY DATA REVISEDMeanwhile, January's reading was sharply revised up to 9.35 per cent from 8.23 per cent reported earlier, and analysts expect the March reading could eventually be adjusted upwards into double-digits. “More monetary tightening is inevitable after today's data and the case for a 50 basis point hike in May is strengthened,” an analyst said. The RBI's next policy review meeting is scheduled for May 3.

According to the monthly data released by the Ministry of Commerce and Industry on Friday, the food price index rose an annual 9.47 per cent in March, compared with a reading of 10.65 per cent in the previous month, and the fuel price index increased 12.92 per cent annually from 11.49 per cent in February, primarily on account of a coal price hike getting factored in. Manufacturing inflation surged sharply to 6.21 per cent in March, compared with 4.94 per cent recorded in the prior month.

WEEKLY DATAWeekly inflation data, also released on Friday, shows that food inflation fell to a year's low of 8.28 per cent for the week ended April 2, as certain essential items, like pulses and wheat, showed a declining trend. Food inflation has declined for the third consecutive week. The figure was 9.18 per cent in the preceding week.

The lowest level of food inflation as seen in 2010 was on November 20 when it stood at 8.6 per cent. During the week under review, pulses dipped by 4.76 per cent, and potatoes and wheat were down 2.73 per cent and 1.05 per cent respectively on an annual basis, official data released here show.

However, other food items continued to gain, with fruits up 24 per cent year-on-year, and the eggs, meat and fish subgroup surging 11 per cent. On an annual basis, milk was up 4.05 per cent, cereals were up 3.49 per cent, and rice and wheat surged by 2.2 per cent. Vegetables were up by 5.41 per cent, led by onion, which surged 7.74 per cent on an annual basis.

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