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Food inflation eases, still over comfort zone

After five consecutive weeks of steady rise, food inflation for the week ended January 1 has declined by 1.5% points to 16.91%.

After five consecutive weeks of steady rise, food inflation for the week ended January 1 has declined by 1.5% points to 16.91%.

However, experts and analysts believe that this fall is unlikely to bring any relief to government’s effort in curbing spiraling food prices as the numbers are still above the comfort zone.

According to the data released on Thursday by ministry of commerce and industry, food inflation declined from previous week’s record peak of 18.32% despite vegetable prices rising by 70.73% on an annual basis in the wholesale market.

?Unless food inflation falls drastically, it would not bring in any relief to consumers,? Ramesh Chand, director, National Centre for Agricultural Economics and Policy Research (NCAP) told FE.

The prices of onions continued to push food inflation as prices went up by 70.70% on a year-on-year basis. Among the individual items in food inflation index, egg, meat and fish became costly by 16.70%, milk by 13.20% and fruits by 17.7%1 annually.

However, price of pulses declined by 14.84%, wheat by 4.87%, potatoes by 1.67%and cereals by 0.12% on an annual basis.

For curbing food prices, a high level meeting was held on Wednesday by the finance minister Pranab Mukherjee agriculture minister Sharad Pawar, Planning Commission deputy chairman Montek Singh Ahluwalia, Cabinet secretary KM Chandrasekhar and Forward Markets Commission chairman BC Khatua.

?I expect some softening of food prices in the coming weeks, coming months. There is normally seasonal decline in these month (November and December) but unfortunately that seasonal decline was not seen,? Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan said.

Food inflation rate has remained high for the entire month of December and the rising food prices will get reflected in the monthly inflation data for December, scheduled to be announced on Friday.

?Vegetables and fish segment would continue keep inflation numbers higher. Though sugar prices have been falling lately, but its impact on the numbers would only be felt in later months,?Anand James, Chief Analyst, Geojit Comtrade said.

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First published on: 14-01-2011 at 02:13 IST
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