Although food inflation slid to its 18-month low at 7.7 per cent during the week ended April 30 from 8.53 per cent in the previous week owing to declining prices of pulses and vegetables, serious concerns remain on a likely price spiral in non-food items and its impact on core inflation.
Lauding the downward trend in food inflation based on the Wholesale Price Index, especially as it was way higher at over 21 per cent during the like week in 2010, Finance Minister Pranab Mukherjee said: “The current trend in food inflation is welcome and we hope to see further moderation in food inflation in the coming weeks... However, there are concerns on price momentum in non-food articles.”
Even as prices of pulses eased by 9.05 per cent, vegetables by 3.64 per cent and potatoes by 3.58 per cent on a year-on-year basis, Mr. Mukherjee pointed to the prime cause for concern and said: “Sustained high non-food primary prices are creating cost-push inflationary conditions in the manufacturing sector. Thus, even though food inflation is declining, the concern on higher core inflation remains.” The Finance Minister, however, hoped that the hike in key policy rates by the RBI would help in containing the inflationary spiral, which has been shifting food to non-food items.
