Food inflation touches 4-month low of 16.80 per cent

New Delhi, Mar 18 (PTI) Cheaper vegetables and pulses
pulled down food inflation to a four-month low of 16.30 per
cent in the first week of March, but there are expectations
that RBI may tighten money supply to prevent inflation from
spreading to manufactured goods.
Food inflation came down by 1.51 percentage points
from 17.81 per cent in the week before March 6, on account of
decline in prices of vegetables, especially onions and
potatoes, as per the Wholesale Price Index (WPI) of primary
products.
Prices of onions fell 11.08 per cent in the wholesale
market over the previous week and that of potatoes by 3.5 per
cent. Overall vegetables prices during the same period dropped
by 10.51 per cent, while pulses became cheaper by 3.85 per
cent.
Food inflation had last touched a below-16 per cent level
for the week ending November 15, 2009, when it had dropped to
15.58 per cent.
"Food prices are coming down. Sugar prices have come
down due to higher production estimates in major producing
states like Maharashtra and Uttar Pradesh," Agriculture and
Food Minister Sharad Pawar told reporters.
Although food inflation is falling, Crisil's Principal
Economist DK Joshi said the Reserve Bank of India may still
raise key policy rates to rein in the general inflation that
was at 9.89 per cent in February and likley to cross 10 per
cent mark in March.
"I see overall inflation in March over 10 per cent. RBI
in its April review is likely to raise key policy rates by 25
basis points," Joshi said.
Earlier, Finance Minister Pranab Mukherjee too had said
that he would not be surprised if overall inflation reaches
double digits this month.
RBI in its annual credit policy to be announced on April
20, will try to address the twin objectives of protecting
growth and contain rising prices.
Though food prices are falling on a weekly basis, they
are still high for most commodities except onion when compared
to the corresponding period last year.
On annual basis fuel prices rose by 12.68 per cent,
mainly on account of the increase in duties in the budget.
Following the duty increase prices of petrol and diesel went
up over Rs 2.50 a litre.
Milk was costlier by 15.31 per cent when compared with
prices prevailing during the corresponding week in 2009. PTI