Food inflation eases to 20-month low of 7.33%

Written by fe Bureau | New Delhi | Updated: Jul 29 2011, 06:01am hrs
Food inflation decelerated to the slowest pace in 20 months after prices of pulses, milk, meat and fish eased.

According to data released by ministry of commerce and industry on Thursday, the weekly food inflation declined to 7.33% for the week which ended on July 16 from 7.58% reported in the previous week.

The moderation in food inflation is expected to come as a relief for the government and the Reserve Bank, which has initiated measures for battling inflation.

The marginal fall in food inflation in comparison to last week has been mainly attributed to fall in prices of pulses despite prices of other items continue to rise.

The latest figure is the lowest since separate data for food inflation was first released in November, 2009.

During the week under review, prices of pulses fell by 8% in comparison to last year. However, prices of other items went up.

The fourth advance estimate of the food production during 2010-11 revealed that the pulses (tur, gram, urad and mong) production last year went up to another record of 18.09 million tonne from 14.66 million tonne achieved during 2009-10.

With a record pulses production, the food inflation has moderated and with widespread monsoon rains, the food prices in general is expected to be under moderation, P K Joshi, senior programme coordinator, International Food Policy Research Institute told FE. He said that due to fairly even monsoon rainfall till now, food inflation is expected to lower during next few months.

The food inflation data also indiciate that onions became more expensive by 22.66% and fruits became 13.90% dearer in comparison to same period last year.

Even the potatoes became 10.55% costlier, while milk was up 9.96%. Vegetable prices were up by 7.59% during the same period.

Finance minister Pranab Mukherjee has repeatedly stated that both the Government and the central bank are working to bring inflation down to comfortable levels.

Experts and analysts have expressed concern about fluctuations in the food inflation graph.

Vegetable prices have risen considerably since June 2011 and are expected to display volatility in the coming months given demand-supply mismatches that arise on account of the perishable nature of such produce, Aditi Nayar Economist, ICRA said.

She also said that given the rising consumption demand for non-vegetarian protein products, their prices are unlikely to ease significantly in the absence of a strong supply response.

After the food inflation declines for last few weeks, FE had recently reported that comfortable stocks and less-than harsh summer months this year have ensured stability in prices of rice, wheat, potato, onion and tomato across major cities in the country. Usually, prices go up during summer months because of supply constraints.