Food inflation in double digits after 5 months

Surging onion prices pushed up wholesale price-based food inflation to double digits, at 10.05 per cent, for the week ended August 20 after more than five months.

However, economists described the rise in food inflation as a seasonal factor and said the RBI was likely to go for the expected 25 basis point rise in policy rates later this month. The central bank, they said, would count more on the headline inflation number, in which the food component was not large.

Onion prices raised food inflation to double digits from 9.80 per cent in the previous week. Even the high base of 15.14 per cent food inflation in the corresponding week of last year could not arrest the rise.

A few other items like cereals showed just a marginal rise and many others like protein-based articles registered a decline in inflation compared to the previous week.

Inflation in onions rose to a whopping 57.01 per cent during the week.

Inflation in onions has been above 20 per cent since July 16. Onion prices rose to Rs 25 a kg in retail in the capital on Thursday, an increase of 25 per cent in the last fortnight. The rise was attributed to a delay in monsoon in Maharashtra and Gujarat, the key producing centres.

Finance Minister Pranab Mukherjee called the double-digit food inflation ‘disturbing’. “Inflation is always a matter of concern and we shall have to improve the supply of food items,” he said. “Inflation is a worry... If you see the data, last year at this time food prices went down and then rose again. So, I would not be surprised if prices rise a little bit,” Planning Commission deputy chairman Montek Singh Ahluwalia said.

“For any monetary authority anywhere in the world, inflation is the basic concern. Growth is less and we are all concerned about it. We have to look at balancing inflation and growth,” RBI deputy governor K C Chakrabarty told reporters here.