Reversing a three-week declining trend, food inflation rose to 8.74 per cent during the week ended April 9. This is despite a decline in food price index declining a bit during the week. The rise was primarily due to the way we calculate inflation on yearly basis.
Food inflation was at 8.28 per cent in the previous week. The part reason for rise in inflation is a slight decrease in the year-ago inflation to 20.31 per cent from 20.80 per cent in the previous week of last year.
At the inauguration of the Civil Services Day here, Prime Minister Manmohan Singh said: “...during the past year-and-a-half, persistent inflation, especially in the food sector, has become a cause for concern...the long-term solution lies in increasing production and productivity in the agricultural sector.”
He said the need of a growing and increasingly more prosperous population can only be met by enhanced production of a diversified basket of agricultural products. The prime minister said the government has strived for a delicate and difficult balance to control inflation without hurting growth.
In fact, wholesale food price index, on which inflation is based, declined from 183 points during the week ended April 2 to 182.9 points for a seven-day period ended April 9.
ICRA economist Aditi Nayar said: “The rise in food inflation, despite a marginal decline in the food price index in week-on-week terms, was on account of the base effect. Higher prices of fruits, and to a smaller extent, cereals and pulses were offset by a decline in vegetable prices.”
Going forward, Nayar expected food inflation to decline below eight per cent in May, but remain somewhat volatile in the coming weeks.
Overall inflation rose to 8.98 per cent by end of the last financial year from 8.31 per cent in February.