New Delhi:
Costlier fruits and onions pushed up food inflation to a two-month high of 9.01 per cent for the week ended May 28, but the Prime Minister's chief economic advisor has expressed hope that the rate of price rise could moderate on the back of a good monsoon.
Food inflation, as measured by the Wholesale Price Index (WPI), was 8.06 per cent in the previous week. In the last week of May, 2010, it was as high as 20.62 per cent.
The last time when food inflation was above 9 per cent was for the week ended March 26, when it had stood at at 9.18 per cent.
As per data released by the government today, fruits became 30.78 per cent more expensive year-on-year, while onions were up by over 14 per cent.
In addition, milk prices went up by 8.49 per cent and egg, meat and fish became dearer by 6.99 per cent. Cereals also became costlier by 5.77 per cent on an annual basis.
"If the monsoon is favourable, food prices will come down over the next 2-3 months," Prime Minister's Economic Advisory Council Chairman C Rangarajan said.
Other experts also expressed a similar opinion on the role of the monsoon.
"The progress of the monsoon will play a major part in determining the food inflation trajectory. If the monsoon is normal, we may well see a moderation in the rate of price rise of food items in the months to come," Standard Chartered Head of Research Samiran Chakraborty said.
Following its arrival in Kerala in the last week of May, the monsoon has progressed till Maharashtra and Andhra Pradesh and the forecast say it will gain momentum in next few days.
During the week under review, inflation of overall primary articles stood at 11.52 per cent, up from 10.87 per cent in the previous week. Primary articles have a weight of 20 per cent in the overall inflation basket.
However, inflation of non-food primary articles fell to 20.97 per cent from 21.31 per cent in the previous week.
"This (food inflation) is above the comfort level. Besides, commodity price fluctuations, particularly that of crude, continues to have an impact," Deloitte, Haskins & Sells Director Anis Chakravarty said.
While agreeing with the PMEAC chief's views on the monsoon, other experts pointed out that sustained high global commodity prices would put pressure on headline inflation, which has been above 8 per cent since January, 2010.
Headline inflation stood at 8.66 per cent in April. The RBI, in its monetary policy for 2011-12, had projected that overall inflation would average 9 per cent during the first half of this fiscal, before moderating to around 6 per cent by the end of the financial year.
It had cautioned about the high global commodity prices, mainly crude.
Rangarajan said he expects headline inflation to be around 6.5 per cent by March, 2012.
"Overall inflation will come down slowly by October-end. Once the monsoon picture becomes clear, I expect decline in prices. We could see WPI at 6.5 per cent by March-end," he said.
Commenting on the issue, Crisil Chief Economist D K Joshi said: "Global commodity prices are still running high and is likely to continue exerting pressure on the headline inflation numbers. We expect RBI to hike rates by 25 basis points on June 16."
Food inflation, as measured by the Wholesale Price Index (WPI), was 8.06 per cent in the previous week. In the last week of May, 2010, it was as high as 20.62 per cent.
The last time when food inflation was above 9 per cent was for the week ended March 26, when it had stood at at 9.18 per cent.
As per data released by the government today, fruits became 30.78 per cent more expensive year-on-year, while onions were up by over 14 per cent.
In addition, milk prices went up by 8.49 per cent and egg, meat and fish became dearer by 6.99 per cent. Cereals also became costlier by 5.77 per cent on an annual basis.
"If the monsoon is favourable, food prices will come down over the next 2-3 months," Prime Minister's Economic Advisory Council Chairman C Rangarajan said.
Other experts also expressed a similar opinion on the role of the monsoon.
"The progress of the monsoon will play a major part in determining the food inflation trajectory. If the monsoon is normal, we may well see a moderation in the rate of price rise of food items in the months to come," Standard Chartered Head of Research Samiran Chakraborty said.
Following its arrival in Kerala in the last week of May, the monsoon has progressed till Maharashtra and Andhra Pradesh and the forecast say it will gain momentum in next few days.
During the week under review, inflation of overall primary articles stood at 11.52 per cent, up from 10.87 per cent in the previous week. Primary articles have a weight of 20 per cent in the overall inflation basket.
However, inflation of non-food primary articles fell to 20.97 per cent from 21.31 per cent in the previous week.
"This (food inflation) is above the comfort level. Besides, commodity price fluctuations, particularly that of crude, continues to have an impact," Deloitte, Haskins & Sells Director Anis Chakravarty said.
While agreeing with the PMEAC chief's views on the monsoon, other experts pointed out that sustained high global commodity prices would put pressure on headline inflation, which has been above 8 per cent since January, 2010.
Headline inflation stood at 8.66 per cent in April. The RBI, in its monetary policy for 2011-12, had projected that overall inflation would average 9 per cent during the first half of this fiscal, before moderating to around 6 per cent by the end of the financial year.
It had cautioned about the high global commodity prices, mainly crude.
Rangarajan said he expects headline inflation to be around 6.5 per cent by March, 2012.
"Overall inflation will come down slowly by October-end. Once the monsoon picture becomes clear, I expect decline in prices. We could see WPI at 6.5 per cent by March-end," he said.
Commenting on the issue, Crisil Chief Economist D K Joshi said: "Global commodity prices are still running high and is likely to continue exerting pressure on the headline inflation numbers. We expect RBI to hike rates by 25 basis points on June 16."
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