Food inflation at 11.47%

Wholesale food inflation shot up to 11.47 per cent for the week ended August 28 due to increase in prices of cereals, fruits and milk. Ananlysts attributed the rise to play of statistical base effects, as most expected food inflation to moderate in the coming months when kharif production came to the market.

Given a good monsoon, expectations of bumper kharif crop are high. This will ease of food prices.

“Week-to-week variations happen during the monsoon season. However, this year, rainfall has been plentiful and this will result in a good crop, bringing in more supplies,” said Crisil India Chief Economist D K Joshi.

Food inflation, as measured by the Wholesale Price Index (WPI), stood at 10.86 per cent for the previous week and at 15.14 per cent during the corresponding week in 2009. The fuel index showed no change during the week and the inflation rate for the category stood at 12.71 per cent.

“As expected, the food inflation has accelerated on a week-to-week basis. I would expect the rate of food inflation to start moderating sometime by the first week of October. What I expect in October is moderation in the rate of inflation, which will be due to higher base effect and somewhat better crop,’ said Siddharth Shankar, economist with financial services firm KASSA India.