Food inflation inched up marginally to 17.87 per cent for the week ended February 20 from 17.58 per cent in the previous week on account of higher prices of milk, vegetables and cereals such as wheat and rice on an annual basis.
With this, while the prices of rice have gone up by 10 per cent, wheat by 14 per cent, pulses by 35 per cent, potatoes by 28 per cent and onions by 11 per cent on a year-on-year basis, the government has attributed the inflation in food items to supply-side constraints and bottlenecks.
In recent days, Finance Minister Pranab Mukherjee has pointed to the prevailing multi-level supply chain system as the major culprit for stoking food inflation. “Particularly with regards to food, I do agree that the cost of intermediation is high from farm gate to the wholesale markets and from wholesale markets to retail markets,” he said, while noting that the cost of intermediation was abnormally high and could perhaps be solved through increased competition. One way to increase competition, he said, would be to improve distribution channels and set up the physical infrastructure required for post-harvest storage. Significantly, however, even as the inflation in the fuel, power and lubricant group tapered down to 9.59 per cent from 9.89 per cent in the previous week, a fresh surge is sure to be reflected in the group during the coming weeks and seep in to the WPIheadline inflation.
