Food items still burning holes in pockets: RBI

Even though inflation has declined for four successive weeks to touch a seven-month low of 8.40 per cent, food items are still costing a lot to a common man with their prices touching the sky, according to RBI.

High prices of food items is evident from divergent trends in wholesale and consumer price inflation rates.

While the inflation for wholesale prices came down to 8.40 per cent for the third week of November, latest data for consumer price inflation showed that it has reached a new high in 10 years in October due to higher weight of food articles.

"Consumer price inflation for the months of September and October did increase. This is possibly owing to the firm trend in food articles inflation and higher weight of food articles in measures of consumer price index," RBI Governor D Subbarao said in a speech.

Consumer prices inflation based on articles consumed by industrial workers crossed into double digits zone in October for the first time in 10 years by touching 10.45 per cent.

For the same month, consumer prices inflation based on products consumed by agricultural workers as well as rural labourer reached 11.41 per cent.

However, Subbarao expressed hope that consumer prices inflation would also come down, along with wholesale prices inflation.

"Historically, there has been a correlation between wholesale and consumer price inflation and given this correlation, consumer price inflation too can be expected to soften in the months ahead," the RBI governor said.

Even in wholesale prices, while prices of fuel and many manufactured items are coming down, those of several food items are in fact rising.