Food inflation eased marginally to 8.06 per cent during the week ended May 21 from 8.55 per cent in the previous week, mainly owing a fall in the prices of wheat, pulses and vegetables. However, the price volatility in non-food items continues to be a cause for concern as the inflation in this primary article segment, though declining, still remains above 20 per cent.
Even as food inflation, as measured by the Wholesale Price Index (WPI), at slightly over 8 per cent during the week was way lower when compared to 21.15 per cent during the third week of May, 2010, the inflation in non-food primary articles eased only marginally to 21.31 per cent, ostensibly owing to the Rs.5 a litre hike in the retail prices of petrol following which the motor fuel was up 32.41 per cent on a year-on-year basis.
Despite the uncertainty over oil prices in the global market, Finance Minister Pranab Mukherjee expressed cautious optimism over a likely moderation in inflation in the coming weeks. Noting that though uncertainty still prevailed on the fuel price front, he said a decline in overall primary articles' inflation was also evident.
“... If the declining trend in food items and non-food primary articles continues, then perhaps it will be possible to have a moderate rate of inflation … The important figure is the non-food WPI. There is practically a two percentage point decrease from 23.22 per cent to 21.31 per cent [in that segment]. My comment is that there will be a moderation in inflation,” Mr. Mukherjee said.
Mr. Mukherjee also felt that analysts should look at the broader picture and not the week-to-week or month-to-month inflation figures even though the fact remains that the retail prices of diesel and LPG are expected to be raised some time during this month which, in turn, would get reflected in the WPI inflation data with a fortnight's time lag.
Commenting on the WPI data, financial services firm Kassa Director Siddharth Shankar said: “The numbers have shown some improvement, but it is too early to say that inflation will fall in the coming months. We still have to see the impact of fuel price hike.”
During the week, prices of pulses eased by 9.22 per cent year-on-year, while wheat turned cheaper by 0.77 per cent. Alongside, vegetable prices were lower by 1.06 per cent on a yearly basis, while potatoes became cheaper by 2.15 per cent. However, milk turned dearer by 7.04 per cent while eggs, meat and fish were also 5.50 per cent costlier. Other food items also turned more expensive with prices of fruits up 30.51 per cent and onions by 12.32 per cent on an annual basis.
