After a gap of almost two months, inflation dipped marginally to 0.7 per cent but there is no respite for people as prices of items of common consumption like potato and vegetables continue to rule high.
The 13-basis point slide in inflation over 0.83 per cent in the previous week was on account of a slight easing of prices of certain items like poultry chicken, bajra, fruits, arhar and spices.
The common man has been hit hard by the rising prices of potatoes and vegetables which have soared by 81 per cent and 43 per cent respectively in the past one year. At the same time pulses have got dearer by 20 per cent and rice by 17 per cent.
The wholesale price-based inflation was at 0.83 per cent in the previous week compared to 12.08 per cent during the corresponding week a year ago.
Food prices are likely to go up in the coming weeks as floods in the southern states of Karnataka and Andhra Pradesh have destroyed crops, analysts said.
Commenting on inflation, Planning Commission Deputy Chairman Montek Singh Ahluwalia had said, “food price inflation is the principal area of inflation, which is a cause of concern. But one cannot really say that has triggered inflation, as overall inflation is very low.”
Outlining the government’s effort to deal with the rising food prices, Ahluwalia said the government is trying to strengthen the Public Distribution System and making provisions for imports of those items which are in short supply.
Analysts say a more than expected rate of price rise could push inflation above 6 per cent by the end of the current fiscal.
According to Crisil Principal Economist D K Joshi, inflation is likely to touch 6 per cent by March 2010.
On an annual basis, processed food items rose further from last week. Their prices were up 11 per cent on a yearly basis as sugar turned dearer by 43 per cent.
During the week, minerals like iron ore prices rose as much as 6 per cent, gypsum by 9 per cent. However, prices of chromite fell by 50 per cent, barytes by 8 per cent and fire clay by 7 per cent.
At the same time, imported edible oil got cheaper by 2 per cent, sugar and coconut oil by one per cent each. Salt was expensive by two per cent while butter by one per cent.
Other manufactured items like zinc prices declined by 6 per cent, steel ingots by 4 per cent, components of switch gear by 6 per cent and electric motor by 2 per cent.
Inflation for the week ended August 1 has been revised upward to (—)0.83 per cent from (—)1.74 per cent estimated provisionally