Food inflation rises to 9.80 percent; Pranab expresses concern

August 25th, 2011 - 6:46 pm ICT by IANS  

New Delhi, Aug 25 (IANS) India’s annual food inflation rose to 9.80 percent for the week ended Aug 13 as compared to 9.03 percent in the previous week even as Finance Minister Pranab Mukherjee said the government was concerned over inflation which remains “perilously near double digits”.

“It is bad news that inflation has increased. I am more concerned about food inflation, which is perilously near double digits,” Mukherjee said Thursday while reacting on the weekly figure.

Inflation rose during the week under review due to spike in the prices of onions, potatoes, vegetables and fruits.

Onion prices almost doubled year-on-year. During the week under review, onions became costlier by 44.42 percent from last year’s price. Potatoes became 16.39 percent costlier.

The finance minister said he was concerned over the recent figures but would not take long-term view on the basis of the weekly fluctuations.

“As I have always maintained, weekly inflation figures are variant. We should make an assessment on the basis of a relatively longer period,” Mukherjee told reporters outside Parliament.

The primary articles index, which has a 20.12 percent weight in the wholesale price index, rose by 12.40 percent during the week under review as compared to 11.64 percent in the previous week, according to data released by the commerce and industry ministry.

However, the index for fuels and power, which has a 14.91 percent weight in the wholesale price index, remained unchanged at 13.13 percent.

Inflation has remained stubbornly high, almost near double digits, despite an aggressive monetary tightening policy adopted by the Reserve Bank of India.

The RBI has hiked key policy rates 11 times since March 2010. In its latest monetary policy review last month, the RBI hiked key policy rates by 50 basis points.

The repurchase rate, the interest the central bank levies on short-term borrowing by commercial banks, has been hiked to 8 percent from 7.5 percent and the reverse repurchase rate, or interest paid on short-term lending, raised to 7 percent from 6.5 percent.

Near double-digit inflation gives rise to the speculation that the central bank might hike the rates again.

The headline inflation based on wholesale price index was recorded at 9.22 percent in July, marginally lower from 9.44 percent in the previous month.

The following are the yearly rise and fall in prices of some main commodities that form the sub-index for food articles:

Onions: 44.42 percent

Vegetables: 6.52 percent

Fruits: 27.01 percent

Potatoes: 16.39 percent

Eggs, meat, fish: 13.37 percent

Cereals: 5.22 percent

Rice: 6.02 percent

Wheat: (-) 2.80 percent

Pulses: (-) 5.56 percent

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