Food inflation down to 16.81%, essential items still costly
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Last Updated: Friday, January 22, 2010, 00:45
New Delhi: Food inflation eased a bit to 16.81 per cent in the week ending January 9, but was still too high for the comfort of the government that announced measures to augment supply of essential commodities.

The Centre has also called a meeting with states early next month to discuss a strategy to douse the inflationary flame, which Chief Statistician Pronab Sen said could push overall inflation above nine per cent by this fiscal-end from the current level of over seven per cent.

The government today swung into action to insulate the poor from surging food prices and increased the ration quota of rice and wheat to the poor by 10 kg per family for this month and February.

Even though food inflation declined for the third week in a row, the current level of around 17 per cent inflation is quite high compared to last year's 11.59 per cent. Food inflation stood at 17.28 per cent a week ago.

Prices of essential items like pulses, potatoes and cereals continued to rule high. Potatoes turned costlier by close to 50 per cent year-on-year, while pulses became costlier by 47.90 per cent.

Cereal prices were up 14.18 per cent, with wheat rising nearly 15 per cent and rice 12.64 per cent.

"Unless something dramatic happens on agri prices, it (inflation) would probably be over 9 per cent," Chief Statistician Pronab Sen told reporters.

If overall inflation climbs over 9 per cent by this fiscal-end, it would be more than three percentage points, projected by the Reserve Bank. The intensity of inflation could be gauged from the fact that the comfort zone of inflation stands at four per cent.

The government has taken a slew of measures to step up supply of foodgrain in retail markets to curb price rise. It has authorised cooperative major NAFED and the National Cooperative Consumers Federation to sell 70,084 tonnes of wheat and 28,000 tonnes of rice through their outlets.

To bolster wheat supply in the open market, it has not only lowered the price of wheat for sale to bulk consumers but also simplified and reduced the time lag in finalisation of tenders by the Food Corporation of India.

The government has allocated an additional 5.18 lakh tonnes of wheat in addition to the existing 10 lakh tonnes, for sale to bulk consumers under the open market sale scheme.

Planning Commission member Abhijit Sen said agricultural produce will decline three per cent this fiscal. This may further add to the shortages of food items in the country.

As food inflation continued to remain at high level, despite easing for three consecutive weeks, economists expect RBI to squeeze money supply to tame inflationary expectations.


First Published: Friday, January 22, 2010, 00:45

Tag: InflationFoodWPI
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