Inflation is likely to go further up due to rising food prices in the past two weeks owing to supply constraints, low farm arrivals because of sowing season and floods in major grain producing states, Gujarat, Madhya Pradesh, Maharashtra and Rajasthan, hitting arrivals at major mandies.

The four-week period during which inflation fell from 4.8% to 4.03% the Wholesale Price Index (WPI) of food articles decreased by just one point to 220.3 from 221.3 as the food prices stabilised during the period. However, prices of essential food items have risen significantly since the week ended on June 23, when inflation rose from 4.03% to 4.13% due to rising food article prices. Food articles have a WPI weightage of 15.4%.

?The rise in commodities prices will have an impact on the inflation, subject to the weight given to each commodity. When the inflation dropped from 4.8% to 4.03%, the food grain index dropped from 210.2 to 209.5. Thus with the rising food grain prices, we can expect the inflation to rise. Our calculations suggest an increase by 10-15 basis points,? said Amol Tilak, research analyst, Kotak Commodity Services Ltd.

Since the week ending June 23, prices of wheat, cereals, pulses, edible oils and vegetable have increased significantly. Also, cement companies, too, have hiked their prices by Rs 3 to Rs 5 per 50 kg bag (cement has a WPI of 1.74%)0 and transportation costs have gone up due to floods. All this will contribute to rising prices and have a positive impact on inflation.

?Supply side disruptions caused due to flooding will impact the transportation of goods which can lead to increase in prices. The flooding conditions are to be monitored closely as any further deterioration in conditions will aggravate the already serious conditions. Prices of agro-commodities in coming days will determine the future course of inflation,? said Badruddin, senior research analyst, Commodities, Angel Broking. The price of wheat has increased to Rs 1040 from Rs 970, groundnut oil has increased from Rs 751.6 to Rs 798, moong dal from Rs 2,615 to Rs 2,950.