Food inflation falls to 7.78% may rise soon

<p>Food inflation dropped to a six-week low of 7.78 per cent for the week ended June 18 from 9.13 per cent during the previous week due to the combined impact of a high base last year and drop in prices of vegetables, eggs, fish and meat.

However, fuel price index climbed 12.98 per cent during the same week, which experts believe could push up the benchmark wholesale price index-based inflation as the data was before the recent hike in fuel prices.

During the corresponding week last year, food inflation was around 20.12 per cent, while it was 22.93 per cent in the earlier week.

The benchmark wholesale price index (WPI) inflation stood at an annual 9.06 per cent in May despite continued monetary policy tightening by the central bank, which has increased interest rates 10 times since March 2010.

“Food inflation has been fluctuating, mainly due to the base effect, today’s number offers a mixed picture as inflation has dropped mainly due to fall in prices of vegetables and pulses,” DK Joshi, Principal Economist, Crisil said. He said a good monsoon leading healthy sowing should further lower prices in the coming months.

Analysts feel food prices might again start inching up as freight rates are projected to move up following the recent rise in diesel prices.