Food inflation fell sharply to an almost four-year low of 1.81 per cent during the week ended December 10, indicating an overall easing of prices. It stood at 4.35 per cent in the previous week. The fall was mainly due to decline in prices of essential commodities such as onion and potato.
The continued dip in inflation will certainly embolden the Reserve Bank of India (RBI) to cut interest rates when it reviews the monetary policy on January 24. The latest food inflation numbers are the lowest since the week ended February 9, 2008, when it stood at 2.26 per cent.
According to official data released here on Thursday, onion became cheaper by 49.38 per cent year-on-year during the week under review, while potato prices were down by 34.39 per cent. Prices of wheat also fell by 4.21 per cent. Overall, vegetables became cheaper by 26.37 percent.
Experts feel that moderation in food inflation numbers, which was in double-digit in early November, was on account of good kharif harvest as well as a high base. They felt that it was an ideal situation for a rate cut by the RBI.
The RBI, in its mid-quarter review on December 16, had kept the key rates unchanged. While inflation in vegetables and wheat segments eased during the reporting week, prices of protein-rich items such as eggs, milk and pulses have continued to remain high.
Pulses became costlier by 14.22 per cent, while milk was dearer by 11.19 per cent and eggs, meat and fish by 9.25 per cent.
Inflation in the overall primary articles category stood at 3.78 per cent during the week ended December 10, as against 5.48 per cent in the previous week.