After a gap of three months, food inflation fell to the single digit at 9.52 per cent during the week ended February 26, raising hopes that the overall inflation might come down close to seven per cent by the end of this financial year, as projected by the finance ministry.
The overall inflation stood at 8.23 per cent in January. The figures for February will come next week.
This is the first time after skyrocketing prices of onions had catapulted food inflation into double digits in December that the rate of price rise in food items came down below 10 per cent. A week before, food inflation stood at 10.39 per cent.
Onion prices which started declining in the previous week, again rose by close to four percentage points, largely due to base effect. If weekly movement is seen, (traditionally inflation is measured on annual basis), onion prices did fall by 0.52 percentage points.
Milk prices rose at a rate of 8.42 per cent against 11.07 per cent, as the government banned the exports of skimmed milk powder.
However, protein-based non-vegetarian items like eggs, meat and fish turned expensive by 15.38 per cent compared to 14.50 per cent a week ago. Prices of pulses, another protein-rich food item, continued to decline.
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Fruit prices also rose at the rate of 18.35 per cent against 16.34 per cent a week ago. Most other prices moved in a narrow range.
Due to the base effect, fuel and power prices rose but at a less rate of 9.48 per cent during the week, against 12.56 per cent a week ago. However, there was no change in these prices during the week and annual computation of figures gives this impression of moderating fuel and power inflation.
Economists warned that rising crude prices due to the political crisis in Libya may lead to a rise in the prices of at least those items in India that are market determined.