Food inflation inched up yet again to 8.04 per cent for the week ended July 23 from a 20-month low of 7.33 per cent in the previous week mainly on account of an increase in the prices of onions, fruits and milk.
Even as the government can draw some comfort from the fact that food inflation during the like week in July last year was way higher at 16.27 per cent, it is clear that current spurt in numbers is despite the wide difference as a consequence of a high base.
Not surprising, therefore, that Finance Minister Pranab Mukherjee, in his reply to the discussion on price rise in the Lok Sabha, expressed dissatisfaction over the latest WPI (Wholesale Price Index) figures while noting that efforts were on to bring it down to 5 per cent. “... it [food inflation] should be around 5 per cent which will be comfortable ... six-to-seven per cent can be tolerated but surely not 8 per cent,” he said.
As per the WPI data, while onions turned dearer by 26.36 per cent on a year-on-year basis, fruits were also costlier by 15.97 per cent during the week. Prices of most other food items also ruled higher. Milk prices went up by 10.26 per cent while vegetables were costlier by 10.20 per cent on an annual basis. Alongside, prices of cereals were also up by 5.13 per cent, potatoes by 7.85 per cent while eggs, meat and fish were 6.66 per cent dearer.
According to economic analysts, while much of the inflationary pressure is owing to high global commodity prices coupled with a domestic demand-supply mismatch, it is the uncertainty over monsoon rainfall that may fuel the price rise further.
Clearly, the Indian Meteorological Department's (IMD) latest monsoon forecast is a cause of concern. “Any slippage in the monsoon could affect food inflation numbers, especially in the case of vegetables, fruits and such other items,” Crisil's Chief Economist D. K. Joshi said.
“The 7.33 per cent food inflation in the previous week was very low and some increase was expected,” Deloitte, Haskin and Sells Director Anis Chakravarty said.
