Food inflation eases to 8.96% for the week-ended June 4

India's food Inflation after soaring to its two moth’s high level in the previous week has eased marginally to 8.96% on annual basis during week-ended June 04, 2011. Thus, with this, food inflation has remained under the much-dreaded double digit mark for the 12th straight week.

According to the data released by the ministry of commerce and industry on Thursday, food price index eased marginally to 8.96% on annual basis during week-ended June 4, from an annual rise of 9.01% recorded in the previous week. However, the index of 'Food Articles' rose by 0.5% to 188.4 (Provisional) from 187.5 (Provisional) during the previous week due to higher prices of jowar (5%), egg and milk (2% each) and fish-marine, gram, condiments & spices and mutton (1% each).  However, the prices of barley (2%) and arhar, poultry chicken, masur, moong, maize, pork and ragi (1% each) declined.

The index for 'non-food articles' group declined by 0.1% to 183.9 compared with 184.0 for the previous week due to lower prices of flowers (6%), mesta (4%), castor seed, groundnut seed, gingelly seed and safflower (3% each) and raw jute and linseed (1% each). However, the prices of gaur seed (8%), fodder (6%), rape & mustard seed (2%) and raw rubber and copra (1% each) moved up. As a result, the broader 'primary articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI) rose by 2% to 196.6 from 192.7 seen in the previous week. The annual rate of inflation, calculated on point to point basis, for this group stood at 12.86% for the week ended June 4, 2011 as compared with 11.52% in the previous week.

The index for 'fuel and power' with a weight of 14.91% in overall WPI declined by 0.5% to 159.9 from 160.7 for the previous week due to lower prices of light diesel oil (6%), aviation turbine fuel (4%), naphtha (3%) and furnace oil (2%). However, the prices of bitumen (2%) moved up. The annual rate of inflation for this group, calculated on point to point basis, for the group stood at 12.84% (Provisional) for the week ended June 04, 2011 as compared to 12.46% for the previous week.

Meanwhile, in a bid to cool the surging inflation, RBI in its mid-quarter monetary policy review as anticipated hiked repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25% to 7.5% with immediate effect. Consequent to the increase in the repo rate, the reverse repo rate under the LAF will stand automatically adjusted to 6.5% and the marginal standing facility (MSF) rate to 8.5% with immediate effect.