Food inflation at 4-yr low

Declines to 4.35 per cent for week ended December 3, may give breather to RBI.

The rate of price rise in food articles declined to a four-year low of 4.35 per cent for the week ended December 3.

A fall in inflation by 2.25 percentage points, from 6.6 per cent for the previous week, is unheard of in recent times. This is the lowest rate of food inflation since the week ended February 23, 2008, when it stood at 4.28 per cent.

The data, coming a day ahead of the Reserve Bank of India’s monetary review, may provide some relief to the central bank, which has been struggling to keep a balance between inflation and growth, analysts said.

The decline in inflation could be attributed to the high base effect of last year. Inflation rose to 10.78 per cent this time last year from 8.93 per cent for a week earlier.(Click here for graph)

The decline comes a day after Chief Economic Advisor Kaushik Basu said food inflation could fall to below 3 per cent in a month. “In India, we have been fighting a long battle against inflation. It is beginning to wind down. I expect, by the first week of January food inflation will go down below three per cent,” he said on Thursday while speaking at the CII-organised Delhi Economic Conclave. The government’s steps to tame price rise are beginning to bear fruit, he said.

Basu headed a government panel to suggest measures to arrest food inflation towards the end of last year and early this year.

For the week ended December 3, inflation in onion declined 46.03 per cent. It has been in a negative zone for some time. The rate of price rise in potatoes fell 33.28 per cent. It has been in the negative territory for four weeks now.

In broad categories, milk showed some price pressure over the week. Inflation in milk rose to 11.08 per cent from 11.02 per cent. The rate of price rise in other items was in the negative zone or showed a decline.

Food inflation constitutes 14.34 per cent of overall inflation. Non-food inflation in primary articles (unprocessed items) rose slightly to 2.12 per cent during the week. Fuel inflation fell to 15.24 per cent from 15.53 as petrol prices were cut in early December.