Food inflation slips to 7.58%

The price of milk was up 10.76 per cent and eggs,meat and fish grew almost 8 per cent more expensive. Cereals and vegetables became dearer by 4.77 per cent and 4.31 per cent year-on-year,respectively.

Inflation of overall primary articles stood at 11.13 per cent during the week under review,down from 11.58 per cent in the previous week. Primary articles have a share of over 20 per cent in the WPI.

Meanwhile,inflation of non-food articles stood at 15.50 per cent for the week ended July 9,up from 15.20 per cent in the previous week. However,prices of non-food articles were stable on a week-on-week basis.

Commenting on the latest numbers,Finance Minister Pranab Mukhrejee expressed hope of further moderation on the price front.

“If this declining trend continues,I do hope it will have a moderating influence on the price front,” he said.

Experts agreed that the pressure from food prices would decline in the coming months,as a good monsoon would lead to a bountiful harvest,but cautioned against high commodity prices.

The data on food inflation comes a day after the government said that pressure from headline inflation would remain till December on account of high global commodity prices,despite moderation in food prices during recent months.

It had also said that post-December,the pressure on the price front would moderate and help stabilise inflation at 6-7 per cent by March,2012. Headline inflation stood at 9.44 per cent in June. It has remained consistently above the 9 per cent mark since December,2010.

On the price front,Mukherjee said the domestic situation was improving,though concerns remain over international issues. “The trend is encouraging so far as the domestic sector is concerned. But we do not have total control over international issues,international commodity prices,fuel prices and the influence of the external inflationary pressure could have some adverse impact on our domestic front,” he said.

Economists also said that pressure from global commodity prices,particularly crude oil,remain.

“Food inflation numbers will fall further due to a good monsoon and sufficient food stock. However,headline WPI will be high as high prices of commodities will put pressure,”Crisil Chief Economist D K Joshi said.

He said the 6-7 per cent projection for headline inflation is achievable,but would depend on manufactured items,which have been the major contributor to inflationary pressure in recent months. Joshi added that the Reserve Bank will go for another hike in interest rates at its quarterly monetary review on July 26.

The RBI has already hiked key policy rates ten times since March,2010,to curb demand and tame inflation.

“The (food) inflation numbers released on Thursday point to a stabilisation,” said Siddharth Shankar,director of financial services firm KASSA. He,however,cautioned against reading too much into the the data for a single week.