Falling prices of pulses, wheat and vegetables brought down food inflation to an 18-month low of 7.47 per cent for the week ended May 7, a development described as “declining trend” by the government.
However, experts cautioned against any complacency and said rate of price rise of non-food items still remain high and could prompt the RBI to further raise interest rates.
The latest numbers are the lowest since food inflation data, as a separate index, began to be released since late 2009. “Both on food inflation and overall Whole Price Index (WPI), there is a declining trend,” Finance Minister Pranab Mukherjee told reporters here.
Food inflation, as measured by WPI, was 7.70 per cent in the previous week. During the week under review, prices of pulses fell by 8.87 per cent year-on-year, while vegetables and wheat also became cheaper by 3.61 per cent and 0.06 per cent, respectively. Food inflation was in double-digits for most of 2010, before showing signs of moderation since March this year. Experts, however, cautioned that core (non-food) inflation still remained a matter of concern.