Food inflation rises to 16.74%

Spurt in rise in prices of fruits, pulses and milk prompted the overall food prices to increase by 0.19 percentage points for the week ended May 29 from 16.55 per cent in the previous week.

This also puts pressure on the Wholesale Price Index-based inflation, which stood at 9.59 per cent in April — much above the tolerable level of five per cent inflation rate set by RBI.Analysis of latest food inflation data shows that pulses became costlier  by 31 per cent (year on year basis), milk by 21.1 per cent and fruits by 18.7 per cent.  Similarly, staple food-grains such as rice and wheat, turned costlier by 7.12 per cent and 3.4 per cent respectively. Cereals became expensive by 5.13 per cent.  Going by this trend, the RBI, which is scheduled to announce its first quarterly review of the monetary policy on July 27, may take measures to curtail money supply in a bid to douse the fire of inflationary expectation. Moreover, food inflation is likely to go up further if the government musters up courage to take a call on the Kirit Parikh Committee, which has recommended decontrolling of auto fuel prices besides hefty hike in prices of domestic LPG and kerosene.

Quite high

Meanwhile, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the rate of price rise in edible items is quite high, but will now start coming down. “It is true that the year-on-year food inflation rate is actually still quiet high. But the inflation rate will now start coming down now,” Ahluwalia told reporters here.

Stating that the year-on-year inflation rate is high and we are concerned about it, Ahluwalia said, “it is our expectation that by the end of the year we will see it coming down to around 6 per cent or so.”