Food inflation shoots up to four weeks high at 8.55% for the week ended May 14

Food inflation surged to the highest level in four weeks at 8.55% for the week ended May 14, as prices of fruits, cereals and protein-based items escalated. During the week ended May 14, cereals became costlier by 5.03% year-on-year and prices of onions were up by 8.32%. Moreover, prices of fruit rose by 32.37%, milk by 5.53% and eggs, meat and fish by 8.26%. Meanwhile, though the Index for 'non-food articles' group has declined marginally but the government and Reserve Bank had said that in the months to come, inflationary pressure would be more from core (non-food) items on account of high global prices of commodities, particularly crude.

According to the data released by the ministry of commerce and industry on Thursday, food price index rose 8.55% on annual basis during week-ended May 14, picking up pace from an annual rise of 7.47% recorded in the previous week. Food inflation was at 21.55% in the year-ago period. Meanwhile, the food prices index jumped by 0.6% to 186.7 from 185.5 during the previous week due to higher prices of poultry chicken (5%), jowar (4%), fish-marine (3%), mutton, barley and maize (2% each) and milk (1%). However, the prices of tea (5%), arhar and ragi (2% each) and masur and urad (1% each) declined.

The index for 'non-food articles' group declined by 0.2% to 185.2 compared with 185.6 for the previous week. As a result, the broader ‘primary articles’ index, which has a weight of 20.12% in the overall wholesale price index (WPI) registered an increase of 0.04% to 192.4 from 191.7 seen in the previous week. The annual rate of inflation, calculated on point to point basis, for this group stood at 11.60% for the week ended May 14 as compared with 10.94% in the previous week.

The index for ‘fuel and power’ with a weight of 14.91% in overall WPI remained unchanged at its previous week’s level of 160.01%. The annual rate of inflation for this group, calculated on point to point basis, also remained unchanged at 12.11%.

Though, the Food Inflation data has shot up on week on week basis, but the weekly food inflation has slowed from the double-digit rise for much of 2010. However, the headline inflation at 8.66 percent in April remains considerably above the central bank's comfort level, thereby pressurizing it to continue its rate hike policy.