Food inflation inches up to 16.74 %

Pulses displayed at a shop in New Delhi. Prices of pulses shot up by 31 per cent, milk by 21.1 per cent and fruits by 18.7 per cent. File photo: Kamal Narang

With a sharp increase in the prices of pulses, milk and fruits, food inflation inched up yet again for the second straight week to 16.74 per cent for the week ended May 29 from 16.55 per cent in the previous week, affording little hope to the common man for a respite from the inflationary spiral.

Even as official projection is for a normal monsoon this year and is already active in its spread to various parts of the country, analysts do not expect food inflation to start easing until next month. By then, if a hike in petroleum fuel prices is effected, it will again have a cascading impact on food prices and overall inflation.

Moreover, with the announcement of minimum support prices (MSP) for kharif crops, especially the sharp increase in MSP for pulses, wholesale traders are likely to benchmark their prices for these commodities at the higher level during the next few months.

Wholesale prices of pulses are already on the rise owing to short supplies on account of lower production following last year's drought in most parts of the country. For instance, among pulses, moong (dhuli) has turned the most expensive with a jump of over 11 per cent in retail prices (Delhi) to Rs. 105 from Rs. 94 a kg a fortnight ago. Likewise, arhar has soared 17 per cent to Rs. 82 from Rs. 70 a kg earlier.

According to Crisil's chief economist D. K. Joshi, food inflation is likely to remain range-bound until the next harvest (kharif) as food items have not seen any sustained decline in prices. “Once monsoon arrives, cereal prices may see a decline. So, food inflation would ease in the second-half of the fiscal,” he said.

On a year-on-year basis, prices of pulses are still higher by 31 per cent, milk by 21.1 per cent and fruits by 18.7 per cent. However, potatoes and onions were markedly cheaper with their prices easing by 30.87 per cent and 12.27 per cent, respectively.

On weekly basis, however, prices of fish (marine) were up three per cent while arhar, moong and fruits and vegetables were costlier by one per cent each.