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Food inflation drops to 10.35%

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BS Reporter New Delhi
Last Updated : Jan 20 2013 | 1:11 AM IST

Food inflation, as measured by the Wholesale Price Index (WPI), has moderated to 10.35 per cent in the week ended August 7, primarily due to high statistical base effect as food prices continued to rise on a week-on-week basis.

Food prices rose by 0.2 per cent on a week-on-week basis as prices of fruits increased by 13 per cent during the week.

“The decline can be a blip and the high base effect will bring the figure down. The sequential rise in food prices is something that should be a cause of worry. Sequential figures are more important now,” said Siddharth Shankar, economist with financial consultancy firm Kassa India.

Food inflation had shot to 11.4 per cent, after being in single digits for two consecutive weeks, in the previous week ended July 31. It stood at 14.18 per cent during the first week of August last year.

Fuel prices moderated during the week under consideration and the inflation rate saw a marginal decline to 12.57 per cent in the week, down from 12.66 per cent in the previous week.

Food inflation has been consistently moderating since the second week of May, due to the high base effect and on expectations that a good monsoon will lead to better kharif harvest. The June-September monsoon rains, the main source of irrigation in India, is forecast to be normal. Moreover, the kharif sowing has been 10 per cent more than the drought-hit 2009, leading to optimistic outlook for harvests. This is expected to bring prices down over the next six months.

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First Published: Aug 20 2010 | 2:01 AM IST

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