India’s food inflation falls further to 8.84% for week ended Sept 10

India’s food inflation, measured by the Wholesale Price Index (WPI) continued its moderating trend for the third week, and fell below 9% mark after a record of six weeks high level. Inflation slowed to 8.84% for the week ended September 10 from 9.47% in the week ended September 03. This moderation in food inflation has come on the back of decline in prices of onion, potato, vegetables and fruits. However, for the week under observation, the index for fuel and power surged by almost a percent points. The index for Fuel & Power surged to 13.96% in week ended on September 10 from 13.01% in last week.

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.2% to 195.7 (Provisional) from 195.4  (Provisional) for the previous week due to higher prices of poultry chicken (8%), fish-marine (6%), gram and urad (2% each) and egg, tea, barley, fish-inland, arhar and moong (1% each).  However, the prices of maize (4%), jowar and fruits and vegetables (2% each) and bajra, ragi and wheat (1% each) declined.

The index for Non-Food Articles group rose by 0.1% to 185.4 (Provisional) from 185.2 (Provisional) for the previous week due to higher prices of raw cotton (4%), raw jute (2%) and raw silk, gingelly seed, soyabean, copra (coconut) and groundnut seed (1% each). However, the prices of flowers (16%), castor seed (5%) and linseed and gaur seed (1% each) declined. The index for Minerals group declined by 1.4% to 306.3 (Provisional) from 310.8 (Provisional) for the previous week due to lower prices of crude petroleum (3%).

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI declined by 0.1% to 201.9 (Provisional) from 202.0 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.17% (Provisional) for the week ended September 10 as compared to 13.04% (Provisional) for the previous week.

Meanwhile, the index for Fuel and Power group which has a weightage of 14.91% in WPI, rose by 0.8% to 168.2 (Provisional) from 166.8 (Provisional) for the previous week due to higher prices of electricity (industry) (7%), electricity (agricultural) (6%), electricity (domestic) (4%) and electricity (commercial) and electricity (railway traction) (3% each).

The moderating trend in the weekly food inflation is expected to provide some relief to the government and policy makers. The Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan on September 21, had stated that the Reserve Bank of India’s stance on inflation depends on the inflation scenario in the coming three week. Last week the Reserve Bank of India increased its short term leading and borrowing rates for the 12the time in last 18 months to curb the sticky inflation.