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Food inflation eases to nearly four-year low of 4.35%

The sharp fall in food inflation will bring some relief to the government, which has been battling high inflation for almost two years now. It may also nudge the Reserve Bank to soften its monetary policy at its rate-setting meet tomorrow.

BT Online Bureau | December 15, 2011 | Updated 15:29 IST

Food inflation fell to a nearly four-year low of 4.35 per cent during the week ended December 3, reflecting a decline in prices of essential items like vegetables, onions, potatoes and wheat.

This is the lowest rate of food inflation since the week ended February 23, 2008, when it stood at 4.28 per cent.

 

Experts see RBI moving to dovish stance and pausing hikes

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 6.6 per cent in the previous week. It was recorded at 10.78 per cent in the corresponding period last year.

Experts feel the moderation in the rate of price rise of food items below the psychological 5 per cent-mark will bring relief to the government, which has been battling high inflation for almost two years now.

According to data released by the government on Thursday, onions became cheaper by 46.03 per cent year-on-year during the week under review, while potato prices were down by 33.28 per cent. Prices of wheat also fell by 4.43 per cent.

Overall, vegetables became cheaper by 12.28 per cent.

However, other food products grew more expensive on an annual basis, led by protein-based items.

Pulses became 11.76 per cent costlier during the week under review, while milk grew dearer by 11.08 per cent and eggs, meat and fish by 9.26 per cent.

Fruits also became 9.37 per cent more expensive on an annual basis, while cereal prices were up by 1.85 per cent.

Inflation in the overall primary articles category stood at 5.48 per cent during the week ended December 3, as against 6.92 per cent in the previous week. Primary articles have over 20 per cent weight in the wholesale price index.

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