Food prices hurt consumers: 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 the Reserve Bank of India.

High prices of food items are 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, the latest data for the Consumer Price Inflation showed that it has reached a new high in 10 years in October due to higher weight of food articles.

“The 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 the Consumer Price Index,” RBI Governor D Subbarao said in a speech.

The Consumer Price Inflation, based on articles consumed by industrial workers, crossed into the double-digit zone in October for the first time in 10 years by touching 10.45 per cent.

For the same month, the Consumer Price Index based on products consumed by agricultural workers as well as rural labourers reached 11.41 per cent.

However, Subbarao expressed hope that the Consumer Price Inflation would also come down, along with the Wholesale Price Inflation.

“Historically, there has been a correlation between the Wholesale and Consumer Price Inflation and given this correlation, the Consumer Price Inflation too can be expected to soften in the months ahead,” the RBI governor said.

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

The wholesale primary food inflation has been on a rise since the week ended July 26, when it stood at 5.78 per cent. For the last four months, food inflation has been rising continuously, barring only a few weeks. While in the beginning of October, it was 9.69 per cent, it rose to 10.43 per cent for the week ended November 22, according to the latest figures.