Halting the three-week declining trend, food inflation surged to 8.55 per cent for the week ended May 14 from 7.47 per cent in the previous week, mainly owing to spiralling prices of fruits, milk and protein-based items.
The fresh spike in food inflation is not good news, either for the consumer who has been groaning under the overall inflationary impact or the government which has been striving to contain the price spiral. For one, the increase in petrol prices by Rs.5 a litre with effect from May 14 is yet to be factored into the WPI (wholesale price index) data and this will be reflected in the data for the week ended May 21.
Apart from the inflationary impact of the petrol price hike, as and when prices of transportation fuel diesel and cooking gas LPG are raised, it will mean a fresh spurt in food as well as overall inflation which may prompt the Reserve Bank of India (RBI) to go in for another stiff hike in its key policy rates.
As per the WPI data on primary articles released here on Thursday, while food inflation rose sharply by 1.08 percentage points during the week, prices of primary articles also surged by 23.22 per cent on an annual basis. Likewise, fuel and power inflation was also pegged higher at 12.11 per cent.
Among edibles, prices of fruits on a year-on-year basis were higher by 32.37 per cent, milk by 5.53 per cent and eggs, meat and fish by 8.26 per cent. Cereals were also costlier by 5.03 per cent and onions by 8.32 per cent. Vegetable prices, however, eased by 1.46 per cent as did pulses by 9.49 per cent. Wheat was also cheaper by 0.30 per cent on an annual basis.
As for non-food primary articles, prices went up by 23.22 per cent during the week, with fibres turning dearer by nearly 61 per cent and minerals by 11.78 per cent. With the fuel basket yet to add to the inflationary impact, the government and the RBI have already admitted that in the months ahead, inflationary pressure would be more from core (non-food) items owing to high global prices of commodities, especially crude oil as the country is highly dependent on imports.
Commenting on the WPI data, Kassa Director Siddharth Shankar said: “Inflation is expected to rise further sometime in July-August when I expect the fuel & power inflation to rise. We may see a hike in diesel prices in the coming 6-8 weeks and that will add to inflationary pressures. I expect the liquidity situation to tighten in the coming months, something that will adversely affect the industry”.