Food inflation to remain negative for 2 weeks: Basu

Food inflation is likely to remain in the negative zone for at least two more weeks while the overall rate of price rise is expected to moderate to around 6.75% by March-end, according to Chief Economic Adviser Kaushik Basu.

"We expect food inflation to remain negative for next 1-2 weeks and then turn positive," Basu said here.

He also said the recent decline in food inflation numbers will have a positive impact on the headline inflation. He projected the overall rate of price rise at around 6.75% by end of the financial year.

"I expect the overall inflation to be below 7.5% in December. January inflation will be a little over 7% and by March-end inflation will be around 6.75%," Basu said.

His comments came after food prices fell for the second consecutive week. Food inflation stood at at (-)2.90% for the week ended December 31, 2011.

Food inflation, as measured by the Wholesale Price Index was (-)3.36% in the previous week.

Headline inflation, which also factors in manufactured items, fuel and non-food primary items, has been above the 9% mark since December, 2010. It stood at 9.11% in November, 2011.

Food inflation has a 14% share in the overall Wholesale Price Index (WPI) basket.

The fall in the rate of price rise of food items since the first week of November is substantial, as it has plummeted from double-digit territory into the negative zone.

Earlier in the day, Finance Minister Pranab Mukherjee said that if the declining trend in food inflation continues for some more time, overall inflation will become manageable.