Much to the concern and dismay of the government and the Reserve Bank of India (RBI), food inflation surged yet again to a high of 9.90 per cent for the week ended July 30 from 8.04 per cent in the previous week, driven mainly by higher prices of onions, fruits and protein-based items.
The fresh bout of inflationary pressure is not unexpected as both the RBI and the Prime Minister's Economic Advisory Council (PMEAC) have projected the wholesale price index (WPI) headline inflation to hover at a high of about 9 per cent for a major part of the fiscal year till December before tapering down to about 6.5-7 per cent by March 2012. What, however, is unexpected is that the food segment is again turning out to be a major contributor to the overall high inflation, possibly owing to official apprehensions of an irregular monsoon apart from the problems of demand-supply mismatches.The added fear is that food prices are expected to remain volatile following the U.S. rating downgrade which has destabilised the global financial and commodity markets.
Incidentally, food inflation at 9.90 per cent is at its highest since the week ended March 12 when it was higher at 10.05 per cent before sliding to a 20-month low at 7.33 per cent in mid-July.
In June, headline inflation stood pegged at 9.44 per cent.
The latest data shows that primary articles recorded inflation of 12.22 per cent for the week ended July 30, up from 10.99 per cent a week ago.