Food inflation soars to ‘disturbing’ level of 10.05 percent

September 1st, 2011 - 5:50 pm ICT by IANS  

Pranab Mukherjee New Delhi, Sep 1 (IANS) Food inflation soared to double-digit figure for the first time in over five months on sharp jump in prices of onions, vegetables and fruits, even as Finance Minister Pranab Mukherjee said the figure was “disturbing” and the government would have to improve supply.

Annual food inflation jumped to 10.05 percent for the week ended Aug 20 as compared to 9.8 percent in the previous week, official data showed Thursday.

Onion price has more than doubled year-on-year. During the week under review, onion was 57.01 percent costlier. Fruits were 21.58 percent costlier and vegetable prices rose 15.78 percent.

Food inflation entered the double-digit figure for the first time since the week ended March 12, 2011, when it was at the same level of 10.05 percent.

“This is really disturbing,” Mukherjee said.

The finance minister said food prices were rising mainly because of supply bottlenecks. “Inflation is always a matter of concern and we shall have to ensure and improve the supply of food items,” he said.

The primary articles index, which has a 20.12 percent weight in the wholesale price index, rose by 12.93 percent in the week under review as compared to 12.4 percent in the previous week, according to data released by the commerce and industry ministry.

Surge in inflation gives rise to the speculation that the central bank might again hike the rates in its monetary policy review later this month.

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.

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.

However, the index for fuels and power, which has a 14.91 percent weight in the wholesale price index, declined to 12.55 percent during the week ended Aug 20 from 13.13 percent in the previous week.

Expressing concern over the stubbornly high inflationary pressure, Planning Commission Deputy Chairman Montek Singh Ahluwalia said seasonal factors were pushing the food prices higher.

“Inflation is a worry. If you see the data, last year at this time food prices went down and then rose again. So, I would not be surprised if prices rise a little bit,” Ahluwalia said.

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

Onions: 57.01 percent

Vegetables: 15.78 percent

Fruits: 21.58 percent

Potatoes: 13.31 percent

Eggs, meat, fish: 12.62 percent

Cereals: 4.64 percent

Rice: 4.40 percent

Wheat: (-) 2.52 percent

Pulses: (-) 4.16 percent

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