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Old 03-23-2012, 10:25 AM
AyushPrem AyushPrem is offline
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Post Food inflation plunges to 4-year low of 1.81%
Food inflation fell sharply to a near four-year low of 1.81 per cent for the week ended December 10 as prices of essential items like vegetables, onion, potato and wheat declined.
This is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26 per cent.
Food inflation, as measured by Wholesale Price Index (WPI), was 4.35 per cent in the previous week. It had stood at 13.22 per cent in the corresponding week of 2010.
According to the official data released today, onion became cheaper by 49.38 per cent year-on-year during the week under review, while potato prices were down by 34.39 per cent. Prices of wheat also fell by 4.21 per cent. Overall, vegetables became cheaper by 26.37 per cent.
The drastic fall in food inflation could be attributed to the high base effect. Food inflation has been in double digits for most part of this year. Good harvest and seasonality have also contributed to the decline. Food prices normally move down in the winter season.
"Food inflation also determines the overall inflation which the RBI uses for its policy direction. This shows the RBI is moving in the right direction," Madan Sabnavis, Chief Economists at CARE Ratings said.
The RBI has hiked key rates 13 times since March 2010 to rein in headline inflation, which continues to be over 9 per cent. However, in its latest review, the central bank had put brakes on the rate hike cycle, citing a slowdown in growth.
However, other food products grew more expensive on an annual basis, led by protein-based items.
Pulses became 14.22 per cent costlier during the week under review, while milk grew dearer by 11.19 per cent and eggs, meat and fish by 9.25 per cent.
Fruits also became 8.89 per cent more expensive on an annual basis, while cereal prices were up by 1.68 per cent.
Inflation in the overall primary articles category stood at 3.78 per cent during the week ended December 10, as against 5.48 per cent in the previous week. Primary articles have over 20 per cent weight in the wholesale price index. Fuel group inflation for week ended December 10 remained unchanged at 15.24 per cent (week-on-week). For more information about bonds, Global indices and currency.
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