Halting the fortnight long downward movement, food inflation inched up marginally to 10.86 per cent for the week ended August 21 from 10.05 per cent a week ago, mainly owing to higher prices of cereals, fruits and milk.
The fact that food inflation during the like week a year ago was at 14.86 per cent provides no comfort to the common man as the availability of cheaper vegetables, especially potatoes and onions, was more than offset by the high prices of these three essential items.
The silver lining, however, is that the food price spiral will stabilise in the months ahead on expectations of good kharif crops following adequate monsoon rains and may even slide to a low of 6 per cent by the end of December, as is being projected in certain official quarters such as the Planning Commission as also some economic analysts.
According to Crisil's chief economist D. K. Joshi, there would be some minor fluctuations in food prices for a few weeks.
“However, the overall picture is one of decline due to a good monsoon,” he said and expected food inflation to be in single digit by the last quarter when markets get flooded with fresh farm supplies. In the event, analysts expect the Reserve Bank of India to continue with its tight money stance to contain the overall inflationary spiral.
“We do not think [the] RBI will go for any major changes at its upcoming mid-quarterly review on September 16. However, we may see some action after that,” Mr. Joshi said.
Headline inflation, as measured by the Wholesale Price Index (WPI), had eased a tad in July and dropped to 9.97 per cent, after being in double digits for five months.