New Delhi: The high
cost of onions spread its effect to other vegetables as well,
pushing up India's annual food inflation nearly 400 basis points
to the highest level in a year at 18.32 percent for the week ended
Dec 25, official data showed Thursday.
This was the fifth straight week of sharp rise in food inflation,
which stood at 14.44 percent the week before, as per data on
official wholesale price index released here by the commerce and
The latest spike in inflation left the government even more
worried, particularly after Pakistan banned export of onions to
India via the Wagah border, with Commerce Minister Anand Sharma
making a strong appeal to Islamabad to reconsider the decision.
"We've requested Pakistan that at least those consignments that
had already been booked by Indian importers, should be permitted.
Our embassy in Islamabad is in touch with the authorities there,"
Sharma told reporters here.
But the opposition was scathing in its criticism. "This government
has stolen food out of people's mouths," said Bharatiya Janata
Party (BJP) spokesperson Shahnawaz Hussain. "No item of daily
consumption -- be it onions or tomatoes -- is affordable today."
The rise in onion prices, due to a crop failure in the main
growing regions, and rise in the cost of other essential items
like vegetables, poultry, milk and fruits have again raised the
spectre of a rate hike by the central bank.
Finance Minister Pranab Mukherjee said the latest data on food
inflation was certainly a cause for concern but said since these
were short-term statistics, the real picture would emerge when the
monthly figures on wholesale prices are released.
"It has moved further. It is an area of concern," the finance
minister told reporters here, adding: "Let's wait for monthly
figures. These are weekly variations, but is a matter of concern."
Asked Neelam Upadhyay, a retired school teacher in east Delhi: "If
I have to spend Rs.70 per kg on onions and Rs.50 a kg on tomatoes,
what will I be left with for other things. Even milk and eggs,
which I give my grandchildren everyday, are so costly."
The fresh data reveals how fast prices have galloped during the
52-week period ended Dec 25, particularly of essential
Onions: 82.47 percent
Vegetables: 58.85 percent
Fruits: 19.99 percent
Potatoes: (-)15.45 percent
Milk: 19.59 percent
Eggs, meat, fish: 20.83 percent
Cereals: (-)0.53 percent
Rice: 1.03 percent
Wheat: (-)5.4 percent
Pulses: (-)10.54 percent
Among steps taken by the government, an empowered group of
ministers headed by Mukherjee extended the ban on export of pulses
indefinitely, and decide to release additional five million tonnes
of wheat and rice to be sold through state-run fair price shops.
Earlier, the central bank, in its mid-quarter review of its
monetary policy, kept almost all rates intact, but lowered the
amount banks have to retain in the form of bonds, gold and cash to
ease liquidity in the system.
The move indicated that the Reserve Bank of India (RBI) was
expecting the inflation rate to temper and wanted to make more
credit available to industry to ensure that overall growth does
not suffer for want of funds.
But with inflation back in double-digit, experts believe the
central bank will use all the monetary tools at its disposal to
bring it down. An indication to that effect also came recently
from the top brass of the monetary authority.
"Inflation is not easing as we would like it to be. Upside risks
are still high," Deputy Governor Subir Gokarn said recently,
hinting at what others said was an indication of an imminent rate
hike to curb inflationary expectations.
Economists said the government and the monetary authority needed
to re-look the stated policies on controlling inflation, going
beyond demand-side interventions to the more important supply-side
"Food prices have once again gone up and this shows that monetary
policy has become an ineffective tool for containing food
inflation," said Amit Mitra, secretary general of the Federation
of Indian Chambers of Commerce and Industry (FICCI).
"Demand for food items such as fruits and vegetables, meat, fish
and egg, milk has been increasing. Unless we increase production
substantially and address supply bottlenecks, we will not be able
to control inflation."