Food inflation eases further to 9.42%

NEW DELHI: Food inflation slipped to a three-and-a-half month low in the week to March 5 as onion and milk prices declined, but fuel inflation registered a sharp increase because of a spike in coking coal prices.

Food inflation eased to 9.42% from 9.52% in the previous week, data released on Thursday showed. Inflation in fuel and power rose 3.31 percentage points to 12.79%.

The headline wholesale price inflation for February accelerated to 8.31% from 8.23% in the month before.

The slow pace of moderation in food inflation and rising fuel prices indicate that headline inflation is likely to decline slowly. In a move to keep it under check, the Reserve Bank of India (RBI) on Thursday raised key policy rates by 25 basis point, the eighth hike this fiscal year.

The central bank expects headline inflation, as measured by the wholesale price index, to decline to 8% by end-March, but the government is hopeful of a sharper fall.

"We can say (WPI inflation for March end) may be 7.5%," Finance Minister Pranab Mukherjee said.

The index for food articles registered a 0.2% uptick for the week, indicating that the decline in inflation is due to the base effect.

For the week, prices of vegetables increased by 0.28% while that of onion fell 11.36%. Prices of fruits increased by 3.78%, while prices of other sources of proteins registered a decline.

Inflation in primary articles declined to 12.31% in the first week of March from 13.96% earlier.