Food inflation falls to 10.5 per cent

Cereals, milk

Indian laborers unload sacks filled with onion at a market on the outskirts of Allahabad, India, Wednesday, June 16, 2010. High food and fuel prices are quickly becoming a political issue in India, where opposition groups have staged protests over runaway food prices. India's May inflation rose to 10.2 percent according to government data. (AP Photo/Rajesh Kumar Singh)

In a downtrend for the second week in a row, food inflation eased further to 10.05 per cent for the week ended August 14 from 10.35 per cent in the previous week, mainly owing to a fall in prices of vegetables such as potatoes and onions.

With food inflation much higher at 13.45 per cent during the same week last year, the moderation in the price spiral is explained by the fact that on a year-on-year basis, potatoes turned cheaper by over 50 per cent and onions by 7.29 per cent. On the whole, vegetable prices have come down by 14.23 per cent, according to the official data.

Despite the expected decline in food inflation during the last quarter of the current calendar year, it is the high non-food inflation that continues to remain the primary concern. Even as the overall WPI based inflation, which includes manufactured goods, has eased to single digit at 9.97 per cent in July, it is still beyond tolerable limits and the government expects it to stabilise at around six per cent by the end of December.