New Delhi:
Food inflation fell sharply to a near four-year low of 1.81 per cent as on December 10 as prices of certain essential items like onion and potato dropped steeply.
Experts said that if the low numbers continue for some time it may help the RBI to go for interest rate cuts in its next monetary policy review on January 24. Food inflation was 4.35 per cent in the previous week ended December 3.
The latest number is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26 per cent.
According to 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.
Experts said the moderation in food inflation numbers, which was in double-digit in early November, is on account of good kharif harvest as well as a high base, suggested by the over 13 per cent rate of price rise of food items in the corresponding period of 2010.
"There is the strong base effect, on top of a normal monsoon and good harvest. I believe the moderate rate will continue for at least a month or two and we can expect its impact in the December headling inflation numbers also," Crisil Chief Economist D K Joshi said.
"In such a scenario, the RBI may go for a rate cut in the first quarter of 2012," he added. The central bank in its med-quarter review on December 16 had kept the key rates unchanged.
Experts said that if the low numbers continue for some time it may help the RBI to go for interest rate cuts in its next monetary policy review on January 24. Food inflation was 4.35 per cent in the previous week ended December 3.
The latest number is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26 per cent.
According to 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.
Experts said the moderation in food inflation numbers, which was in double-digit in early November, is on account of good kharif harvest as well as a high base, suggested by the over 13 per cent rate of price rise of food items in the corresponding period of 2010.
"There is the strong base effect, on top of a normal monsoon and good harvest. I believe the moderate rate will continue for at least a month or two and we can expect its impact in the December headling inflation numbers also," Crisil Chief Economist D K Joshi said.
"In such a scenario, the RBI may go for a rate cut in the first quarter of 2012," he added. The central bank in its med-quarter review on December 16 had kept the key rates unchanged.
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