Food inflation eases marginally at 11.81%

NEW DELHI: Food inflation eased marginally towards the end of October after accelerating for three consecutive weeks.

Data released by the commerce and industry ministry on Friday showed the wholesale price index for food articles rose 11.81% year-on-year in the week to October 29, as against 12.21% in the previous week. The decline was largely due to a drop in the prices of vegetables.

Overall food prices declined by 0.25% during the week. Food articles carry a weight of 14.34% in the Wholesale Price Index.

"High food inflation is definitely a concern but its spill over to other sectors is a bigger concern from our policy perspective," said Reserve Bank of India deputy governor Subir Gokarn. The central bank has raised short-term lending rates 13 times in the past 20 months in an attempt to contain the headline inflation.

Vegetables turned costlier by 26.05% year-on-year, while pulses grew dearer by 13.27%, fruits by 11.70% and milk by 11.79%. Inflation in eggs, meat & fish stood at 12.74%, data showed.

However, prices of vegetables declined by 2.04% in the week under review, while those of eggs, meat & fish fell 0.09%.

Experts said high food inflation poses a risk to overall inflation, which remains close to double-digit levels. Headline inflation in September was at 9.7%. Data for October is expected on Monday.

Economists, however, were confident that food inflation would decline in the coming months in line with the decline in headline inflation.

"Over all we expect inflation to start coming down from December due to fall in demand and the base effect. By the end of this fiscal, headline inflation should be around 7%," said Gokarn.

Inflation in the overall primary articles category stood at 11.43%, compared with 12.08% in the previous week. Primary articles have over 20% weight in the Wholesale Price Index.

Inflation in non-food articles, including fibres, oilseeds and minerals, was at 6.41% during the week.

Inflation in energy prices was stable at 14.50%.