Food inflation crosses 11% after six months, soars to 11.43%

Written by fe Bureau | New Delhi | Updated: Oct 28 2011, 11:56am hrs
Food inflation for the week ended October 15 jumped to 11.43% from 10.6% reported last week, crossing the 11%-mark after six months. Prices of all food items barring wheat, onions and potatoes rose, squeezing the lower and middle-income classes in particular struggling with high inflation. Food inflation stood at 14.20% in the corresponding week last year.

On an annual basis, prices of vegetables rose 25%, fruits 11.96%, milk 10.85%, pulses 9.06%, cereals 4.62% and eggs, meat and fish by 12.82%. During the same week, onions fell 18.93%, wheat 0.95% and potatoes 0.45%.

Lower production of pulses and inadequate supply of fruits, vegetables and protein-based items may push up food prices further, the RBI stated on October 25 after raising interest rates for the 13th time since March 2010.

There is lack of transparency while determining the farm gate price and retail price of agricultural produce, Anjani Sinha, managing director & CEO of National Spot Exchange, promoted by Financial Technologies, told FE. He said the government has no control over retail prices of agricultural commodities.

Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research, said food inflation will around 9% even after kharif supplies start coming in.

In just two months, retail tomato prices in the capital city have jumped 75% from R20 to R36 per kg, in line with the price rise in other cities.

With vegetable prices unlikely to ease until after the festive season, food inflation may remain elevated, ICRA economist Aditi Nayar told agencies. The rising food inflation is a serious matter. However, we expect the rate of price rise to come down in near future when the fresh products flood the markets, Crisil chief economist DK Joshi said.