Food prices fall; inflation will continue to moderate: Pranab
food prices declined for the second consecutive week year-on-year,
led by a sharp drop in the price of vegetables, especially onions,
official data showed Thursday. Annual food inflation fell minus
2.9 percent for the week ended Dec 31 as compared to minus
New Delhi: India's
annual inflation rate fell to a two-year low of 7.47 percent in
December, offering relief to policy-makers ahead of crucial state
The inflation, based on the wholesale price index (WPI), was 9.11
percent in the previous month on the back of easing food prices.
It was at 9.45 percent during the corresponding month of 2010.
Seeing the data released by the commerce and industry ministry
Monday, Finance Minister Pranab Mukherjee said inflation would
continue to moderate in the coming months and it would be in the
range of 6-7 percent by March.
"Along with the IIP numbers for November 2011, the recent headline
inflation figures indicate some improvement in the overall
macro-economic parameters in the second half of 2011-12,"
Inflation had remained stubbornly near double-digit for the last
The easing in inflationary pressure and a rebound in factory
output in November, it is hoped, will give the Reserve Bank of
India to cut interest rate when it reviews monetary policy Jan 24.
The RBI last month kept policy rates unchanged after hiking the
key rates 13 times since the beginning of 2010.
However, the general inflation is still much above the central
bank's comfort level of 4-5 percent.
The build up inflation in the financial year 2011-12 till December
was 4.95 percent compared to a build up of 7.12 percent in the
corresponding period of the previous year.
The primary articles inflation fell to 3.07 percent while food
inflation dropped to 0.47 percent. Several food items including
onions, potatoes and other vegetables and wheat became cheaper
In fact, the food inflation was in the negative zone in the last
two weeks of December.
Annual food inflation was recorded at minus 2.9 percent for the
week ended Dec 31 and minus 3.36 percent in the previous week,
which was the lowest since April 2006.
However, inflation in manufactured goods remain on an elevated
level. Manufactured products, having 64.97 percent weight in the
WPI, registered a price rise of 7.41 percent in December
The finance minister said high inflation in manufactured products
continued to remain a "cause of concern" but hoped
that it would ease in the coming months.
"Moderation in inflation would continue in the coming months
though softening in the prices of manufactured goods despite the
rapid decline in non-food primary inflation may be more gradual,"