40% of food items in WPI decline, says study

Special Correspondent

Government’s measures to tame food inflation are working

13 essential food items register significant decline

Prices of pulses drop 2.5 per cent in the last 8 weeks

NEW DELHI: Even as the inflation at more than 11.5 per cent has touched 13-year high, eight commodities, accounting for 40 per cent of the food basket in the wholesale price index, have recorded an average decline of 1.2 per cent in their prices over the last two months, according to an Assocham Eco Pulse (AEP) study.

The food articles which have witnessed decline in prices between mid-April and mid-June are: fruits, pulses, sweet potato, potato, onion, bajra, sugar and wheat. The cumulative weightage of these commodities is 40 per cent in food articles and 7 per cent in the complete wholesale price index. In the last one month, prices of these commodities have declined by 1.7 per cent. The price index of many broader categories of food items has also come down in the eight-week period. This includes foodgrains (-0.09 per cent), and fruits and vegetables (-3.02 per cent). Besides, there are certain food commodities which have recorded declines in prices even on a year-on-year basis. Collectively, wholesale prices of 13 essential food commodities including cabbage, onion, potato, urad, moong, vegetables, fish (inland), sweet potato, papaya, pulses, ragi, sugarcane and bajra registered a significant decline of 13.43 per cent between July 2007 and June 2008.

“Decline in the prices of food items is a healthy trend. It signifies that various measures taken by the government to tame food inflation are working”, said Sajjan Jindal, President, Assocham. The AEP analysis is based on the difference in the value of WPI index as on June 12 and April 12, 2008, for two months rise or decline in prices. For four-week change, the index value as on May 10 was taken and for six months, wholesale prices as on January 2008. Also, the prices of fruits have declined by as much as 7.5 per cent in the last two months. As compared to the index value for fruits in the first week of January this year, inflation is at one per cent. But during the last one month, prices have gone down by as much as 11.72 per cent. Fruits contribute 7.6 per cent to the food basket. While sugar, a major component of India food platter with 19 per cent weightage, has also recorded marginal decline of 0.9 per cent in the last two months ending mid-June, wheat, with 7.25 per cent weight in food articles, too recorded marginal decline of 0.2 per cent between April and June.

However, prices are still one per cent higher if compared to six months old value. Pulses, the main suppliant of proteins in an average Indian meal, have also recorded 2.5 per cent decline in the wholesale prices over the last eight weeks. They account for 3.15 per cent weight of the food articles in WPI. Over the last one year, their prices have declined by 2.95 per cent.

The inflation rate measured for the last six months, however, is still high at 4.69 per cent. Tea, the most important beverage for the commoners, has witnessed the prices hardening by as much as 37 per cent during the last six months. However, there has been a sign of moderation in prices with 0.94 per cent decline between April and June.

Bajra, majorly used by poor households as main foodgrain, has also recorded the decline in wholesale prices.

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