Food inflation continued to remain in negative territory at minus 2.9 per cent for the week ended December 31 owing to a significant fall in the prices of vegetables, particularly onions and potatoes.
Though at a slightly higher level as compared to the (-)3.36 per cent logged in the previous week in December, this is the second successive week that the WPI (wholesale price index) based food inflation has remained in the negative zone. Apart from a marked fall in prices of edibles, this has been partly owing to the effect of a high base as food inflation in the like week a year ago was at over 19 per cent. The heartening WPI data has raised cautious hopes of a cut in interest rates while an enthused Finance Minister Pranab Mukherjee is looking forward to a decline in headline inflation by the end of the fiscal. “Food inflation is still negative ...There is a declining trend … If this trend continues, then the overall inflation with be manageable. Headline inflation should be 6-7 per cent by end-March,” he said.
While the overall prices of vegetables dipped by over 49 per cent year-on-year, the steepest decline was witnessed in the prices of onions by 74.77 per cent and potatoes by 31.97 per cent. Wheat prices also fell by 3.35 per cent. Alongside, protein-rich items continued to cost more. However, pulses remained dearer by 14.72 per cent, as was milk by 10.79 per cent and eggs, meat and fish by 5.22 per cent.