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Food inflation drops to 18-month low of 7.7 per cent

The rate of price rise in food items, as calculated on the basis of the wholesale price index, was 8.53 per cent in the previous week and 21.46 per cent in the same period last year.

Food inflation dropped to 7.7 per cent for the week ended April 30, the lowest level in 18 months, due to a fall in the price of pulses and vegetables, especially potatoes.

The rate of price rise in food items, as calculated on the basis of the wholesale price index (WPI), was 8.53 per cent in the previous week and 21.46 per cent in the comparable period of 2010.

The decline in food inflation is seen as a breather for the government, as the rate of price rise has stubbornly remained high despite its fiscal measures and the Reserve Bank of India's (RBI) monetary tightening steps.

During the week under review, prices of pulses declined by over 9 per cent year-on-year, while vegetables became cheaper by 3.64 per cent. The data revealed that potato prices were down by 3.58 per cent on an annual basis.

However, inflation in other food articles like cereals and fruits remained high. Cereals became dearer by 4.54 per cent, while fruits prices were up over 35 per cent on an annual basis.

Milk was also costlier by 4.3 per cent in the week ended April 30 compared to the corresponding seven-day period last year. Eggs, meat and fish were also up 4.62 per cent.

The data further showed that inflation in non-food primary articles was 28.62 per cent during the week under review. Fibre prices rose almost 86 per cent and minerals by 11.95 per cent.

Early this month, RBI had increased borrowing rates by 50 basis points to curb demand and control inflation. The food segment contributes almost 15 per cent in the WPI.

Headline or overall inflation stood at 8.98 per cent in March, which is above the government's comfort zone.

In the monetary policy, RBI said overall inflation is likely remain in the range of 9 per cent during the first half of fiscal 2011-12, but is expected moderate to around 6 per cent by the year end.