In what Finance Minister Pranab Mukherjee sought to dub as ‘disturbing', food inflation surged to 9.80 per cent for the week ended August 13 from 9.03 per cent in the previous week, driven mainly by soaring prices of certain vegetables such as onions and potatoes, fruits, milk and protein-rich items.
As per the WPI (Wholesale Price Index) data released here on Thursday, the fact that food inflation during the like week in 2010 was way higher at over 14 per cent did not provide any consolation to the common man even in terms of the high base effect anomaly.
Showing an all-round surge in prices during the week, onions and potatoes turned dearer by 44.2 per cent and 16.39 per cent, respectively, on an annual basis. Fruits were also more expensive by 27.01 per cent while the prices of protein-based edibles such as eggs, meat and fish also went up by 13.37 per cent. Alongside, price of milk was higher by 9.51 per cent and cereals also turned 5.22 per cent dearer.
Disturbing, says Pranab
Commenting on the food price spiral, Mr. Mukherjee said: “The bad news is that inflation has increased ... On the inflationary front, it is disturbing ... I am more concerned about food inflation, which is perilously near double digits.” However, he noted that weekly numbers do not show a long-term trend. “As I have always maintained, weekly inflation figures are variant. We should make an assessment on the basis of a relatively longer period,” he said.
Irrespective of a definite trend, there is clear evidence of price pressure on both food and non-food items and in such a scenario, the Reserve Bank of India (RBI) is expected to go in for another hike in key policy rates next moth to douse inflationary expectations. “Inflation remains at an elevated level. We expect the RBI to continue with its monetary tightening and hike key policy rates by another 25 basis points at its September 16 mid-quarterly review,” Crisil's Chief Economist D. K. Joshi said.
However, even as the apex bank has already upped its key rates 11 times since March last year to contain the price spiral, headline inflation still stands pegged at a high of 9.22 per cent for the month of June this year.
The WPI data shows that the only food commodities which turned cheaper were pulses and wheat the prices of which declined by 5.56 per cent and 2.80 per cent, respectively on a yearly basis. Overall, while primary articles' inflation was pegged at 12.40 per cent during the week, up from 11.64 per cent in the previous week, inflation in non-food articles, including fibres, oil seeds and minerals, stood at 17.80 per cent as against 16.07 per cent in the previous week.
