Food inflation surges to 9.13% for week ended September 17

India’s weekly food inflation measured by the wholesale price index (WPI), after declining for three consecutive weeks have surged to 9.13% for the week ended September 17 from 8.84% in last week. The increase was due to surge in price of Egg, Meat & Fish, Potato and Pulses. 

According to the data released by Ministry of Commerce and Industry, the index for Food Articles group rose by 0.8% to 197.3 (Provisional) from 195.7  (Provisional) for the previous week due to higher prices of gram (6%), masur, arhar, urad, poultry chicken, condiments & spices and fish-marine (2% each) and fruits & vegetables, maize, jowar and milk (1% each).  However, the prices of barley (4%), coffee (3%) and bajra and ragi (2% each) declined.

The index for Non-Food Articles group declined by 0.3% to 184.8 (Provisional) from 185.4  (Provisional) for the previous week due to lower prices of flowers (15%), soyabean (7%), groundnut seed and raw jute (3% each) and gingelly seed (1%).  However, the prices of raw silk (7%), raw cotton (4%), raw rubber (2%) and fodder, mesta, copra (coconut) and linseed (1% each) moved up.

The index for 'Minerals' group declined by 0.9% to 303.6 (Provisional) from 306.3 (Provisional) for the previous week due to lower prices of copper ore (15%), chromite (10%), bauxite (7%) and barytes (4%).  However, the prices of magnesite (14%), zinc concentrate (11%), sillimanite (7%), steatite (6%), dolomite (3%) and iron ore (2%) moved up.

As a result, the index for primary articles group which has the highest weightage of 20.12% in WPI rose by 0.4 % to 202.7 (Provisional) from 201.9 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 11.43% (Provisional) for the week ended September 17 as compared to 12.17 % (Provisional) for the previous week.

Meanwhile, the index for Fuel and Power group which has a weightage of 14.91% in WPI, rose by 0.7% to 169.4 (Provisional) from 168.2 (Provisional) for the previous week due to higher prices of petrol (5%),  light diesel oil and furnace oil (4% each), naphtha and aviation turbine fuel (3% each) and bitumen (1%).  However, the prices of electricity (industry) (5%) declined. The annual rate of inflation, calculated on point to point basis, stood at 14.69 % (Provisional) for the week ended September 17 as compared to 13.96 % (Provisional) for the previous week.

The surge in weekly food inflation is likely to raise the concern of the government and industry as the Reserve Bank of India has reiterated that the RBI is ready to sacrifice some economic growth in order to control inflation and inflation expectations. In order to control inflation, the RBI since March 2010, has increased its short term lending rates by 350 basis points or 3.5%, as a result, cost of capital has increased significantly, affecting the pace of investment and growth of the economy.