Food inflation touched 17.94% in the last week of January, raising the political pressure on the government just before the start of the Budget session of Parliament. The third consecutive weekly rise, government data released on Thursday showed, was due to an increase in the price of fruits & vegetables, pulses and spices.
The weekly inflation rate rose by 38 basis points (a basis point is a hundredth of 1%). The rise is expected to force the government to continue with zero import duty on food items, including wheat, rice, pulses, sugar and edible oils.
Prime Minister Manmohan Singh last week asked state chief ministers to closely monitor stocks of essential food items and revamp the public distribution system to ensure that food reached the poor. Singh also said he expected food inflation to ease soon.
?The worst is over as far as food inflation is concerned. I am confident that we will soon be able to stabilise food prices,? he had said at a conference on food prices. RBI deputy governor Subir Gokarn also said he expected food inflation to moderate later in the year, on condition that the country had ?a normal monsoon?.
Rising prices have also created uncertainty in bond markets, where yields rose to a 16-month high on Thursday with dealers particularly nervous about the lack of clarity on the government?s borrowing programme for 2010-11.
