The on-paper benefit may get evened out when fuel price hike is factored into

A high base effect pulled down food inflation to 12.92 per cent for the week ended June 19 from 16.90 per cent in the previous week as the statistical anomaly translated into a sharp drop in the rate of rise in the prices of certain cereals and vegetables even as other edibles such as pulses, fruits and milk continued to remain expensive.

Although the whopping 3.98 percentage point week-on-week drop in wholesale price index-based food inflation is likely to provide some respite to the government whose prime focus of concern is now shifting to the monsoon playing truant, economic analysts fear that even the on-paper advantage of the statistical glitch may get evened out when the cascading impact of the recent hike in diesel and other fuel prices is factored into the WPI data.

Statistical glitch

In a large measure, the sharp decline in food inflation during the week was on account of the high base effect, in that the rise in prices was at such a high around the like week last year the current price spiral appears relatively lower in statistical terms.

“The significant fall in food inflation is due to the [high] base effect,” said Planning Commission Principal Advisor Pronab Sen who retired as Chief Statistician of India on Wednesday. Barring potatoes, onions and cereals such as wheat and rice, most of the other food articles items continued to rule dearer.

The effect of the high base is evident from the inflation index of each commodity. While for cereals it came down to 5.36 per cent as against 13.42 per cent a year ago, vegetables fell 1.17 per cent from a high of 25.19. In this segment, potatoes turned 39.61 per cent cheaper while onion prices were lower by 7.36 per cent.

Likewise, the rate of price rise in rice came down to 6.44 per cent from 17.22 per cent a year ago and for wheat to 4.49 per cent from 6.40 per cent.

More In: Economy | Business | National | News