Food inflation declined marginally but was still high at 9.47 per cent for the week ended September 3, with prices of all items, barring pulses and wheat, rising on an annual basis.

Food inflation, as measured on the basis of the Wholesale Price Index (WPI), stood at 9.55 per cent in the previous week. The rate of price rise of food items was 15.16 per cent in the corresponding week of 2010.

As per data released by the government today, prices of pulses fell by 2.45 per cent year-on-year, while wheat became cheaper by 2.03 per cent during the week ended September 3.

However, other food items became more expensive during the week under review.

Onions grew dearer by 42.98 per cent on an annual basis, while potato prices were up 21.16 per cent.

Furthermore, fruits became 22.64 per cent more expensive during the week ended September 3 and overall, prices of vegetables shot up by 17.47 per cent.

In addition, milk became 10.02 per cent costlier, while the rates for cereals were up by 5.02 per cent during the seven-day period under review.

The fall in food inflation could be attributed to a moderation in the rate of price rise of some of the items on a week-on-week basis, even though they remained higher on an annual basis.

The decline could also be attributed to the high inflation of over 15 per cent in the corresponding year-ago period, a phenomenon dubbed the ‘high base effect’ in economic parlance.

Overall, inflation in primary articles was recorded at 13.04 per cent during the week ended September 3, down from 13.34 per cent in the previous week. Primary articles account for over 20 per cent of wholesale price index inflation.

Inflation in non-food articles, which include fibres, oilseeds and minerals, stood at 18.49 per cent during the week under review, compared to 19.88 per cent in the previous week.

Meanwhile, fuel and power inflation went up to 13.01 per cent from 12.55 per cent in the previous week.

Food inflation has been hovering near the double-digit mark since July-end and even went above 10 per cent for a week in mid-August.

Earlier this month, the government banned onion exports to curb rising prices of the product, which have shot up from Rs. 15 per kilo to Rs. 25 per kilo in the national capital during the past few weeks.

Experts are of the view that despite the latest falls, pressure on the food price front will continue to keep the government and the Reserve Bank on their toes.

Headline inflation, which factors in manufactured items, fuels and non-food primary items, in addition to food commodities, stood at a 13-month high of 9.78 per cent in August.

The Reserve Bank has already hiked policy rates 11 times since March, 2010, to tame demand and curb inflation.

However, inflation continues to remain high and in addition, the country’s economic growth has seen a drastic slowdown, which some have attributed to the rising cost of credit.

Industrial production fell to a 21-month low of 3.3 per cent in July. Economic growth in the April-June period stood at 7.7 per cent, the lowest in six quarters.

This has put the central bank, which is scheduled to conduct its mid-quarterly review of the monetary policy tomorrow, in a dilemma over whether to continue with its hawkish policy stance to tackle inflation, or pause on its monetary tightening strategy with a view to get the country’s growth back on track.

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