Impact will be more on import-dependent food items, says Economic Survey.
With political turmoil in West Asia intensifying, the government’s pre-Budget Economic Survey warns that food prices in India could go up, in line with rising global prices, even as the overall inflation might moderate in the coming months. The impact would be more on import-dependent food items, like edible oils.
Calling for maintaining an anti-inflationary monetary stance that won’t stymie growth, the Survey said inflation seemed to be driven by demand factors, in spite of improved supplies. This is in contrast with last financial year, when inflation was mostly because of poor monsoon.
| INFLATED WOES PRIMARY ARTICLES AND FUEL ARE THE MAIN SOURCES OF CONCERN | |||
| % growth | ‘08-09 | ‘09-10 | Apr-Dec |
| ’10-11 | |||
| All Commodity | 8.0 | 3.6 | 9.4 |
| Primary | 10.9 | 12.7 | 18.0 |
| (food inflation) | -7.6 | — | — |
| Fuel, power | 11.6 | -2.1 | 12.3 |
| Mfd products | 6.2 | 1.8 | 5.3 |
Primary food articles in the revised wholesale price index (WPI) touched a historic high of 21.9 per cent in February 2010, before declining to 9.4 per cent in November and again rising to 13.6 per cent in December.
Among food items, sharp rise in prices was observed in onions, fruit, eggs, meat & fish and milk. The rate of food inflation has been in double digits for 76 weeks since June 5, 2009.
However, overall WPI, which peaked at around 11 per cent in April 2010, has been on the decline, which the survey attributes largely to macroeconomic steps taken by the government and the Reserve Bank of India.
The inflation in terms of consumer price index for industrial workers (CPI-IW) remained in double digits from July 2009 to July 2010, while CPI for agricultural labourers (CPI-AL) and rural labourers (CPI-RL) reached double digits in May 2009 and remained there until July 2010.
CPI-AL and CPI-RL had been higher than CPI-IW because of improvement in purchasing power in rural areas and changing consumption pattern, the Survey said.
The two major contributors to high CPI-IW were food and housing. The rate of food inflation in the CPI-IW rose to 7.98 per cent in December from 5.35 per cent in November.
