Food inflation rises for the second week

NEW DELHI: Annual food inflation rose for the second week on the trot, affirming RBI's fears of a spillover into other commodities and services and mounting pressure on the government to take more measures to arrest prices.

Boiling food prices also cast a shadow on the government's readiness to effect fuel price hikes as suggested by the Kirit Parikh panel on Wednesday.

Annual inflation in food articles rose to 17.56 per cent for the week ended January 23 from 17.4 per cent in the previous week, partly due to a poor harvest after the worst monsoon in nearly three decades, according to data released by the commerce ministry on Thursday. While prices of wheat, pulses and vegetables have increased, cereals and rice have become cheaper.

"Food prices have been sticky for some time. I don't expect any downward movement until there is some clarity on the crop yields from the next season," said DK Joshi, chief economist at credit rating agency Crisil.

Fuel price inflation, in tandem with global oil prices, increased to 5.88 per cent from 5.7 per cent in the previous week, spurred by a spike in light diesel oil and furnace oil prices.

The wider inflation , as measured by the wholesale price index (WPI), has already risen to 7.31 per cent for December, forcing RBI to raise its forecast to 8.5 per cent for the fiscal year-end.