Propelled by vegetable prices — particularly onions — food inflation surged to 9.80 per cent for the week ended August 13, prompting Finance Minister Pranab Mukherjee to call it “perilously near double digits”.
Of late, food inflation has been showing sharp fluctuations. In fact, it came down to 9.08 per cent in the previous week, but was at four-and-a-half-month high of 9.90 per cent the week before that.
“The bad news is that inflation has increased,” the finance minister said. “On the inflationary front, it is disturbing.... I am more concerned about food inflation,” he told reporters here.
Close to double digit inflation will further put pressure on the RBI to raise policy rates further. Mukherjee, however, said assessment should be made only after looking at the long-term trend, and that not much should be read into weekly inflation numbers.
Though, a rising trend was observed in all major items, the rate of price rise in vegetables saw quite a substantial jump. Inflation in vegetables touched 6.52 per cent from just 2.59 per cent the week before when it was at a month low. Now, the rate of price rise in onions ascended further to 44.42 per cent compared to 37.62 per cent the earlier week. Similar was the case with potatoes, where inflation climbed sharply to double digits at 16.39 per cent versus 7.22 a week before.
Madan Sabnavis, Senior Economist, CARE Ratings, said the country was “trapped in the high inflationary spiral”. He called the situation “grim”, blaming it on unchanged farm productivity levels.
Egg, meat and fish inflation also touching double digits at 13.37 per cent for the week ended August 13 versus 9.93 per cent the previous week. Milk, however, showed a marginal fall in the rate of price rise to 9.51 per cent compared to 9.76 per cent.
Economists do not see food inflation easing anytime soon. “The food inflation is up,” said Siddharth Shankar, Director, KASSA, a financial services organisation. “With the way monsoon is moving, I see no respite in the inflation.”
