At last there was some piece of goods news for a beleaguered Government which is facing heat inside and outside Parliament with food inflation dropping to a four-month low of 8 per cent as on November 19.

The fall in inflation is due to fall in prices of essential items like onions, potatoes and wheat giving relief to common-man, while rates for rice and vegetables increased at a moderate pace. The declining trend has come as a relief to the Government which is facing flak from the corporate India as well as the opposition for not being able to manage the economy of the country efficiently and effectively.

This is lowest since July 16 when food inflation was 7.16 per cent.

Food inflation, as measured by the Wholesale Price Index (WPI), was 9.01 per cent in the previous week ended November 12. It stood at 9.03 per cent in the period in the previous year, corresponding to the week-ended November 19, 2011.

Reacting to the declining inflationary trend, a relieved Finance Minister Pranab Mukherjee said: ``If this trend continues, perhaps we may have the year-end inflation at around 6-7 per cent.’’

Onions became cheaper by 40.65 per cent year-on-year during the week under review, while potato prices were down by 10.98 per cent. Wheat prices also fell by 4.71 per cent. There was respite for the households as rice increased only by 2.52 per cent and vegetables by 5.13 per cent. Inflation with regard to vegetables which are also affected by seasonal factors had remained in double digit in past months.

However, prices of protein based items such as milk, egg, meat and fish rose by double digit.

Experts are of the view that the fall in inflation could also have a positive spin-off for the industry and the middle class borrowers since it sends a signal to the Reserve Bank of India (RBI) for a pause in the interest rates hike. RBI will review the interest rates on December 16.

"After the month of August, for the first time food inflation has come down to 8 per cent. Non-food inflation is steadily declining. In October 29, it was 6 per cent and now it has declined to 2.14 per cent,’’ Mr. Mukherjee remarked.

Inflation in the overall primary articles category stood at 7.74 per cent during the week ended November 19, as against 9.08 per cent in the previous week. Inflation in non-food articles was recorded at 2.14 per cent during the week under review, as against 4.05 per cent in the previous week ended November 12.

Headline inflation has been above the 9 per cent-mark since December, 2010. It stood at 9.73 per cent in October this year.


More needs to be done to check inflation: PranabNovember 22, 2011

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