With prices of essential commodities cooling a tad on arrival of rabi crops, food inflation softened further to 16.04 per cent for the week ended April 24 from 16.61 per cent in the previous week.
Even as the general expectation is that a normal monsoon, if as projected by the India Meteorological Department comes true, would help in easing food prices further, fuel inflation held steady at 12.69 per cent owing to higher prices following the hike in duties on petrol and diesel.
Significantly, despite persistent demands by the Opposition earlier this week for rolling back the hike in fuel prices, Finance Minister Pranab Mukherjee held firm and expressed his inability to do so owing to the fragile fiscal situation.
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The gradual decline in food inflation for the second week in a row has raised hopes of some moderation in the overall inflation based on the Wholesale Price Index (WPI) for April from the March level of 9.9 per cent. The headline WPI inflation data for April is expected to be released next week.
According to Chief Economic Adviser Kaushik Basu, the headline inflation is likely to soften to 6-7 per cent in the coming months. “I expect the overall WPI to come down to 6-7 per cent in the next three months,” he said.
However, despite the declining trend in recent weeks, food inflation has remained above 15 per cent since November last year. Keeping this mind, the United Nations' organisation ESCAP has expressed concern over the food price spiral even as it projected a cool-down during the year.
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During the week, inflation eased on account of lower prices of fish, wheat, fruits and vegetables which declined by one per cent each. However, the prices of tea went up by 13 per cent while gram, maize and eggs were also dearer by one per cent each.