~:Statistical Jugglery by the Government??!! Food Inflation drops to 0.42% from 10% plus, in just a little over Three months: Why are the morons in RBI still waiting for the CRR or Interest Rates to be cut, if we are really in a Recession as far as the food price is concerned:~
NEW DELHI: Food inflation fell to its lowest level in almost six years at 0.42 per cent for the week ended December 17, with a sharp decline in prices of essential items like onions and potatoes likely to prompt the RBI to cut interest rates at its policy review next month.
With food inflation declining to below 1 per cent, the lowest since April, 2006, Finance Minister Pranab Mukherjee hoped that headline inflation would drop to 6 per cent by March-end.
"If this trend continues, then you will have year-end (headline) inflation around 6 per cent (plus/minus)... But it can not be lower than 6 per cent, because inflationary pressure was higher in weeks before," he told reporters.
Food items have a 14 per cent share in the overall Wholesale Price Index (WPI) basket.
According to data released today, onions grew cheaper by 59.04 per cent year-on-year during the week under review, while potato prices were down by 33.76 per cent. Prices of wheat also fell by 3.30 per cent.
Overall, vegetables became cheaper by 36.02 per cent. Food inflation was in double digits in early November. It stood at 1.81 per cent in the previous week ended December 10.
Experts attributed the fall to a good kharif harvest as well as a high base.
"This is a base affect and the good kharif harvest has also contributed to moderation. We expect the prices to remain low for the next few weeks and this may help the RBI to go for rate cuts in the near future," Crisil Chief Economist D K Joshi said.
While suggesting that food inflation may go into the negative zone by December-end, Joshi, however, cautioned that headline inflation is likely to remain high due to elevated levels of price rise in manufactured items.
Manufactured inflation, which forms over 65 per cent of the WPI basket, is hovering around 8 per cent.
While inflation in the vegetable and wheat segments eased during the reporting week, prices of protein-rich items such as eggs, milk and pulses have continued to remain high.
Pulses grew costlier by 14.07 per cent during the week under review, while milk grew dearer by 11.30 per cent and eggs, meat and fish by 11.56 per cent.
"The continued decline in vegetable prices subsequent to the harvest has resulted in a substantial easing of the food price index, despite prices of cereals and pulses remaining largely steady over this period. Additionally, the base effect has aided in the sharp decline in the pace of food inflation," ICRA Economist Aditi Nayar said.
Inflation in the overall primary articles category stood at 2.70 per cent during the week ended December 17, as against 3.78 per cent in the previous week.
Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 0.28 per cent during the week under review, as against 1.37 per cent in the week ended December 3.
Fuel and power inflation stood at 14.37 per cent during the week ended December 17, as against 15.24 per cent in the previous week.
News Body: The Economic Times
With food inflation declining to below 1 per cent, the lowest since April, 2006, Finance Minister Pranab Mukherjee hoped that headline inflation would drop to 6 per cent by March-end.
"If this trend continues, then you will have year-end (headline) inflation around 6 per cent (plus/minus)... But it can not be lower than 6 per cent, because inflationary pressure was higher in weeks before," he told reporters.
Food items have a 14 per cent share in the overall Wholesale Price Index (WPI) basket.
According to data released today, onions grew cheaper by 59.04 per cent year-on-year during the week under review, while potato prices were down by 33.76 per cent. Prices of wheat also fell by 3.30 per cent.
Overall, vegetables became cheaper by 36.02 per cent. Food inflation was in double digits in early November. It stood at 1.81 per cent in the previous week ended December 10.
Experts attributed the fall to a good kharif harvest as well as a high base.
"This is a base affect and the good kharif harvest has also contributed to moderation. We expect the prices to remain low for the next few weeks and this may help the RBI to go for rate cuts in the near future," Crisil Chief Economist D K Joshi said.
While suggesting that food inflation may go into the negative zone by December-end, Joshi, however, cautioned that headline inflation is likely to remain high due to elevated levels of price rise in manufactured items.
Manufactured inflation, which forms over 65 per cent of the WPI basket, is hovering around 8 per cent.
While inflation in the vegetable and wheat segments eased during the reporting week, prices of protein-rich items such as eggs, milk and pulses have continued to remain high.
Pulses grew costlier by 14.07 per cent during the week under review, while milk grew dearer by 11.30 per cent and eggs, meat and fish by 11.56 per cent.
"The continued decline in vegetable prices subsequent to the harvest has resulted in a substantial easing of the food price index, despite prices of cereals and pulses remaining largely steady over this period. Additionally, the base effect has aided in the sharp decline in the pace of food inflation," ICRA Economist Aditi Nayar said.
Inflation in the overall primary articles category stood at 2.70 per cent during the week ended December 17, as against 3.78 per cent in the previous week.
Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 0.28 per cent during the week under review, as against 1.37 per cent in the week ended December 3.
Fuel and power inflation stood at 14.37 per cent during the week ended December 17, as against 15.24 per cent in the previous week.
News Body: The Economic Times
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