Wholesale food inflation rises to 17.7%

Wholesale food inflation continued its upward movement, standing at 17.70 per cent for the week ended March 27, primarily due to rising prices of milk and pulses.

Food inflation, as measured by the Wholesale Price Index (WPI), was at 16.35 per cent in the previous week and 6.97 per cent in the corresponding period last year.

Food inflation, which touched a decade high of 19.8 per cent in the second week of December 2009, had showed signs of moderation in January and February. However, it has started rising again for the past two weeks, adding to the expectation that the overall wholesale inflation rate for March would be in double digits.

The overall inflation for February stood at 9.89 per cent. Analysts peg the inflation rate in March to be in the range of 10-11 per cent and expect the Reserve Bank of India will further raise policy rates in the fourth quarter monetary policy review on April 20.

On a year-on-year basis, the inflation rate for cereals and pulses, which constitute the essential consumption basket, stood at 10.92 per cent and 32.6 per cent, compared with 10.79 per cent and 9.38 per cent, respectively, in the corresponding period last year.

The inflation rate for milk in the week stood at 21.12 per cent, against 7.04 per cent last year. The fuel index also witnessed a significant increase and the inflation rate stood at 12.71 per cent for the week, against -6.09 per cent in the corresponding period last year.