Food inflation slipped to its lowest level in three months to 10.30 per cent for the week ended November 6 from 12.3 per cent in the previous week raising hopes of a further moderation to single digit in the months ahead.
The fall in the rate of price rise by two percentage points, as per the Wholesale Price Index (WPI) data released here, marks a steady decline for the fifth straight week owing to a gradual increase in crop arrivals in markets across the country following easing of supply bottlenecks.
The last time around that the food price spiral stood pegged at single digit was during the week ended July 24, 2010, and although the sharp fall in the first week of November has come about after a long gap, the fact remains that the calculation is on a large base as food inflation during the same period last year was at 13.99 per cent.
Be it owing to the high base effect or otherwise, the fall in food inflation to single digit in statistical terms will have a sobering effect on overall inflation which may, as the government expects, ease to 6 per cent by the end of December from the October level of 8.58 per cent.
With industrial growth at a 16-month low of 4.4 per cent in September, the Reserve Bank of India may choose to opt for status quo in key policy rates during its monetary review on December 16, provided the domestic inflation scenario and the global environment remain benign.
However, as of now, there is a hardening trend in global commodity prices and any further spurt will tend to exert fresh inflationary pressure. The WPI data showed that prices of most food articles declined on increased availability or rose marginally. For instance, onions, which had turned dearer following crop damage in Maharashtra, were just 0.63 per cent more expensive during the week.
However, on a year-on-year basis, protein-based food items remained markedly costlier.
While eggs, meat and fish were dearer by over 33 per cent, milk prices were over 25 per cent higher and pulses costlier by 19.4 per cent.
