Food inflation back in single digits at 9.5%

NEW DELHI: Food inflation fell to single digits in the third week of March because of a drop in vegetable and cereal prices during the week.

The wholesale price index for food articles was 9.5% for the week ended March 19 against the same period last year and down from 10.05% in the previous week.

The index for food articles dropped 0.5% during the week.

A rise in inflation in the week before had caused some concern, but economists now expect further decline in food inflation.

"A favourable base effect is expected to aid a decline in food inflation in the coming weeks," said Aditi Nayar, economist with ICRA.

Consumer price inflation for industrial workers (CPI-IW), one of the many retail measures of inflation, declined to 8.82% in February from 9.3% in January because of the drop in food prices.

During the week, prices of vegetables declined by 3.81% while that of important protein sources such as eggs, meat and fish dropped 0.72%.

However, inflation in non-food articles still remained very high at 26.18%. Overall primary article inflation stood at 12.98% for the week while fuel inflation was at 13.13%.

Economists expect the RBI to continue raising rates to keep inflationary expectations in check.

"Recent trends in primary and fuel inflation suggest that overall WPI inflation for March 2011 would exceed the RBI's forecast of 8%," said Nayar.

The wholesale price inflation, the most widely watched gauge of prices in India, rose in February to 8.31% from 8.23% in January.