Food inflation inched up marginally to 15.57 per cent for the week ended January 15 from 15.52 per cent a week ago as vegetable prices continued to rule firm at higher levels.
Rising prices prompted the Reserve Bank of India to hike its key policy rates earlier this week to douse inflationary expectations. However, with no signs of a cool-down in the wake of rising oil and commodity prices in international markets, economic analysts are fearing another round of rate hike by the apex bank during its mid-quarterly policy review in March.
In fact, in anticipation of the rate hike and consequent increase in interest rates during 2011, the stock markets witnessed heavy selling and slumped to new lows in recent times.
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The primary concern of the government and the RBI is the spill-over effect of high food inflation on the manufacturing sector which in turn is certain to impede overall economic growth.
Despite the general expectation of vegetables turning cheaper owing to seasonal factors, prices surged and remained 67.07 per cent higher during the week on an annual basis. While onion prices had skyrocketed a few weeks ago and were dearer by 111.58 per cent on a yearly basis, recent initiatives by the government have had some impact in bringing down prices of the essential kitchen.
Vegetables apart, prices of fruits, milk and other protein-based items also went up during the week even as wheat and pulses turned cheaper. During the week, prices of fruits rose by 16.40 per cent and milk turned dearer by 12.44 per cent on a year-on-year basis. Likewise, egg, meat and fish prices were also 13.58 per cent higher as compared to the same week last year. In cereals, while rice was 2.79 per cent dearer, wheat and pulses turned cheaper by 5.75 per cent and 14.07 per cent, respectively on a yearly basis.
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