Food inflation, based on the annual Wholesale Price Index, eased sharply in mid-October, even as it continues to remain high to exert pressure on the RBI to hike interest rates further.
The Food Price index increased 13.75 per cent in the week ended October 16, sharply lower that the previous week's annual rise of 15.53 per cent, mainly as vegetables continued to exert downward pressure on account of a base effect. Cereals and pulses also contributed to the downward trend. The fuel price index for the latest week surged 11.25 per cent against an annual rise of 11.14 per cent in the previous week, according to data issued by the Ministry of Commerce and Industry on Thursday.
Higher food prices have already pushed up headline monthly inflation to 8.62 per cent in September from 8.5 per cent in the previous month, as against the RBI's “comfort zone” of 5-6 per cent. The central bank is widely expected to hike its key lending rates at its next review on November 2 — the sixth such hike since March — as it looks to close in on its end-March inflation projection of 6 per cent.
According to the data, the Primary Articles group index gained 16.62 per cent during the latest reported week against 18.05 per cent during the previous week. On a sequential basis, the index declined 0.4 per cent as the index for 'Food Articles' group dipped by 0.7 per cent due to lower prices of fruits and vegetables (4 per cent) and bajra, jowar, fish-inland, masur and urad (1 per cent each). However, the prices of poultry chicken, arhar and fish-marine (4 per cent each) and barley (3 per cent) moved up.
The index for ‘Non-Food Articles' group was up 0.3 per cent due to higher prices of copra (7 per cent), raw jute (5 per cent), raw rubber (3 per cent) and raw silk (1 per cent). However, the prices of fodder (3 per cent) and cotton seed and castor seed (1 per cent each) slipped.
The fuel index rose by 0.4 per cent on a sequential basis due to higher prices of light diesel oil (6 per cent), aviation turbine fuel (3 per cent), naphtha and furnace oil (2 per cent each) and petrol (1 per cent). However, the prices of bitumen (2 per cent) dropped.