According to commerce ministry data, onion and wheat prices softened after steadily rising for the past few weeks while arhar, urad, masoor, gram and poultry products turned costlier. Fruit and vegetable prices, which too have been climbing of late, declined.
In the week ended September 10, food inflation had declined to 8.84% from 9.47% reported in the previous week.
Milk and fruit rose 10.35% and 12.47% respectively, while inflation in cereals, milk, eggs, meat and fish declined to 13.17% from last years 28.69%.
Food inflation will remain at 8-9% and is highly unlikely to come down soon, said Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research.
Purchasing power has jumped leading to higher demand of food, but the inefficient supply and storage system has not kept pace, pushing up prices, he added.
Retail prices of key food items like onion, potato and milk have soared in the last two months, in part due to lack of cold storage facilities and constraints in supply management.
Soaring cost of labour and production have combined to push up retail prices, said PK Joshi, senior programme coordinator, International Food Policy Research Institute.
The Reserve Bank of India has raised policy rates 12 times since March, 2010 to tame demand and curb inflation.
The Prime Ministers Economic Advisory Council, however, recently evinced confidence that food prices would moderate over the next months as supplies improve.
Food prices can never go below the minimum support price offered to farmers; this is not realistically possible. As MSP increases, prices will also increase. During the last five years, MSP given to farmers have doubled. People's purchasing power is also increasing; they will get food grains at reasonable prices, KV Thomas, food minister told FE recently.