Food inflation inched up further to 17.56 per cent for the week ended January 23 from 17.40 per cent in the previous week, mainly driven by higher prices of potatoes and pulses.

After easing for three straight weeks from the decade’s high of nearly 20 per cent in December last year, food inflation is expected to move up further during the next few weeks before moderating thereafter. Driven by high food prices, the overall WPI (wholesale price index) inflation also crept up to 7.31 per cent during the last month of 2009 and economists expect a further upward movement to about 8-9 per cent by the end of the current fiscal.

Added to this is the prospect of higher fuel prices contributing to the headline inflation as the Union Cabinet is to take a decision on the Kirit Parikh committee recommendations on deregulation of the oil sector coupled with a hike in the prices of kerosene and LPG. Already, fuel price inflation has increased by 0.2 per cent on a weekly basis.

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