India's Food Inflation Rate Negative For Second Week

(RTTNews.com) - India's annual food inflation rate for the week ended December 31 continued its negative growth at 2.90 percent, due to a sharp dip in the prices of vegetables, especially onion, potato, fruits and some other essential commodities, giving much relief to to the policy makers and common people.

The sharp decline in food inflation is partly because of the base effect and also improved supply of seasonal crops.

After remaining near double-digit for almost two years, food inflation has dropped sharply in the last two months. It has dipped for the tenth consecutive week. It came down to single-digit in the second week of November and has dipped consistently since then. It was recorded at 10.63 percent for the week ended November 5.

Annual inflation rate of food article prices, as measured by the wholesale price index, or WPI, (with base year 2004-05) for the week ended December 31 witnessed a negative growth of 2.90 percent, compared to a negative growth of 3.36 percent in the preceding week.

Percentage of inflation in the corresponding week in the preceding year was 19.09 percent.

The 52-week average inflation for the week ended December 31 was 8.78 percent, according to data released by the Ministry of Commerce & Industry.

As per the official data released on Thursday, onion prices slumped by 74.77 per cent during the week, while vegetable also turned cheaper by 49.03 per cent on a year-on-year basis.

Prices of potato, on the whole, fell by 31.97 per cent, as did wheat by 3.35 per cent.

Annual percentage of inflation for 'Non-Food Articles' also rose to 1.29 percent from 0.85 in the preceding week. The 52-week average inflation for the week ended December 31 was 17.01 percent.

Primary Articles

For primary articles, the annual rate of inflation for the week ended December 31 was 0.51 percent, up from last week's level of 0.10 percent. It was 19.76 percent for the corresponding week of the preceding year. The 52-week average inflation for the week was 11.73 percent, the data revealed.

Index for this group, with a weightage of 20.12 percent, rose by 0.51 percent from the previous week's level.

Index for 'Food Articles' group rose by 0.42 percent from the previous week. Items for which the index showed increase were fish-marine, mutton, barely, gram, jowar, bajra, milk and egg. However, the prices of tea, condiments and spices, ragi, fish-inland and fruits and vegetables declined.

Index for 'Non-Food Articles' increased by 1.29 percent due to higher prices of flowers, sunflower, linseed, raw silk, soyabean, fodder, mustardseed and gingellyseed, while those of raw rubber, copra, safflower, coir fibre and mesta declined.

Fuel & Power

Annual rate of inflation for Fuel & Power for the week ended December 31 declined marginally to 14.45 percent from the previous week's level of 14.60 percent. The 52-week average inflation for the week was 13.24 percent, the data showed.

Index for this major group carrying a weightage of 14.91 was unchanged from the preceding week's level of 172.7.

The RBI last month kept policy rates unchanged after hiking the key rates 13 times since the beginning of 2010.

The fall in food inflation has raised hopes of a decline in headline inflation based on the wholesale price index which, according to the latest available data, was recorded at 9.11 percent in November.

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