Food inflation in the country touched a two-and-half-month high of 9.13% in the week ended June 11 on the back of costlier fruits, milk, onions and protein-based items.Food inflation, as measured by the Wholesale Price Index (WPI), stood at 8.96% during the previous week. It was almost 23% during the second week of June, 2010.Food inflation has crossed the 9% mark after a gap of one week.The latest food inflation numbers are the highest since the week ended March 26, 2011, when the rate of price rise of food items touched 9.18%.As per data released by the government today, fruits became dearer by 28.66% year-on-year, while milk grew 15.30% more expensive.During the week under review, prices of onions went up by 11.89% and eggs, meat and fish by 10.56% on an annual basis.Cereals were also up 4.32% and potatoes became dearer by 0.71%.However, prices of pulses, wheat and vegetables went down during the week. While pulses became 10.34% cheaper, wheat was down 1% and vegetables 9.27%.Overall, primary articles reported inflation of 12.62% during the period under review, down from 12.86% in the previous week. Primary articles have a share of 20% in the WPI.
The latest surge in food inflation comes close on the heels of the India Meteorological Department's (IMD) forecast that monsoon rains are expected to be below normal at 95% of the Long Period Average (LPA), with margin for error of plus or minus 4%.A below normal monsoon can have a serious fallout on agricultural output.Meanwhile, inflation of non-food primary articles stood at 18.43% for the week ended June 11 as against 20.20% during the previous week.Fibres grew more expensive by 43.77% and minerals by 25.90%. Fuel and power became dearer by 12.84% and petrol was up 33.23% year-on-year.Yesterday, Finance Minister Pranab Mukherjee tried to allay concerns over the forecast of 'below normal' monsoon rains during the current season and said the projections are only a shade below the annual average."Let us wait for some more time... They (IMD) are saying it would be around 95% and normal average is 98%," he had said.
The latest surge in food inflation numbers belies the RBI's recent claim that headline inflation would be mostly driven by commodity prices in next few months and the rate of price rise in food items would moderate.Overall inflation was mostly driven by high food prices in 2010.Headline inflation in the country stood at 9.06% in May. The RBI has already hiked key policy rates 10 times since March, 2010, to tame demand and curb inflation.Food inflation was in double digits for most of last year, before showing signs of moderation since March this year. However, it has again started going up since the second half of May.The government had to deal with a series of bad news during recent weeks on the economic front. While January-March economic growth stood at 7.8%, the lowest in five quarters, industrial output also slowed down to 6.3% in April.Reserve Bank's Deputy Governor Subir Gokarn said that food inflation remains uncomfortably high.Food prices, which have been a key contributor to inflation, are being driven by "fundamental", not temporary, factors, Gokarn said on Thursday."It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years," Gokarn said."I think there is sufficient evidence to suggest that food prices are being driven not by transitory factors such as rainfall but by more fundamental factors," he said.
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