Food inflation softens to 18.22%

After rising to nearly 20 per cent in the previous week, food inflation eased a bit at 18.22 per cent towards the close of 2009 but households continued to feel the pinch as prices of pulses, potatoes and cereals were still ruling high.

Food inflation slipped by 1.61 percentage points during the week ended December 26 from 19.83 per cent the previous week as vegetable prices fell marginally on weekly basis though on yearly basis prices continued to soar.

However, if food prices relent on a sustained basis, the trend will buttress the government's confidence about prices easing by next month.

"I think this fear of negative impact of drought being reduced, there will be a softening in food price inflation in the next month," Planning Commission Deputy Chairman Montek Singh Ahluwalia had said earlier this week.

Food prices have been rising over the last year due to drought and floods that hit crops in many parts of the country. Potato prices rose by as much as 110 per cent over the last year, followed by pulses whose prices jumped by 42.21 per cent.

Vegetables on the whole were costlier by over 30 per cent, but a decline from over 46 per cent rise seen last week.

"It's a fall because of decline in vegetables and fruits, but there is no relief from prices of wheat, pulses, rice," Crisil Principal Economist D K Joshi said.