Food inflation eases to 9.5%
Special Correspondent
The Hindu
New Delhi, March 31, 2011
Food inflation eased to single digit at 9.5 per cent for the week ended March 19 from 10.05 per cent in the previous week, ostensibly on account of a decline in the prices of pulses even as fruits, vegetables and protein-based edibles remained costlier.
The lower inflation level, as per the wholesale price index (WPI), is unlikely to afford any cheer for the common man, as the drop is more owing to a high base effect since food inflation during the like week in 2010 stood pegged way higher at 20.18 per cent.
The WPI data revealed that while prices of pulses fell 4.40 per cent on a year-on-year basis, vegetables continued to rule higher by 5.52 per cent during the week with potatoes and onions turning dearer by 8.39 per cent and 6.23 per cent, respectively. Alongside, while prices of fruits surged 24.67 per cent, eggs, meat and fish were 15.34 per cent costlier on a yearly basis.
Base effect helps
Evidently, apart from the statistical anomaly of base effect which tends to provide relief from high prices only on paper and not to pockets, the government will have to undertake some more administrative measures to contain rising food prices as mere tinkering with key policy rates by the Reserve Bank of India is unlikely to yield the desired results.
Since March 2010, the RBI has raised its policy rates eight times to contain headline inflation, but it is common knowledge that food inflation is on account of mismatches in supply and demand.
According to the WPI food inflation data, milk turned dearer by 5.79 per cent on a yearly basis and barring wheat, which remained unchanged, other items also ruled higher with cereals costlier by 3.96 per cent and rice by 2.94 per cent.
Source: http://www.thehindu.com/business/Economy/article1587280.ece
