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Food inflation declines marginally to 9.53%

Last updated on: August 05, 2010 15:32 IST

InflationFood inflation fell to 9.53 per cent during the week ended July 24 on cheaper vegetables, fruits and sea fish, providing some relief to the government facing the Opposition flak on surging prices.

Inflation in food items declined by 0.14 percentage points compared to 9.67 per cent in the previous week.

Also, food inflation is below the 14.58 per cent witnessed in the corresponding period last year, which is also partly responsible for fall in the rate of price rise.

This is for the second week since late last year when the government started coming out with a separate food and fuel inflation that food inflation remained in single-digit.

Analysts expect food inflation to decline further after new crops reach the markets, but said it will not prompt the Reserve Bank to reverse its tight monetary stance.

But major items in the fuel inflation saw no change in prices, as the fuel price hike had a one-time impact on their prices.

However, aviation turbine fuel fell by 4 per cent, leading to a slight decline in fuel, power, light and lubricants inflation to 14.26 per cent during the week against 14.29 per cent in the previous week.

Among food items, vegetables turned cheaper by 3 per cent, sea fish by 2 per cent and fruits by 2.34 per cent compared to the previous week. Compared to last year, mainly vegetables were less expensive by 17.32 per cent. Within vegetables, potatoes were cheaper by 41 per cent and onions by over 4 per cent.

"There is expectation of a better crop following the monsoon and there is also an increase in output in the farmers' hands. The supply side in the market is good.

"Going forward, we can expect further fall in the food inflation rate," NCAER chief statistician Rajesh Shukla said.

Shukla also said RBI is expected to take some policy decisions to tame overall inflation, adding, "we don't see the central bank rushing in."

"The central bank has started reversing its soft monetary policy since the early this year as inflation was on the rise. Axis Bank chief economist Saugata Bhattacharya said, "the monsoon has a key role to play in the downward trend of food inflation.

"The monsoon has been good so far this year and we expect prices to continue on a downward spiral."

Facing the Opposition attack in the Lok Sabha on the issue of price rise, Finance Minister Pranab Mukherjee on Wednesday sought the cooperation of the states in taming food prices, dismissing the charge that the Centre is insensitive to the plight of the common man.

Overall inflation was in double-digits at 10.55 per cent in June. Lower food inflation is not expected to pull down the general inflation in July as manufactured-items are getting costlier.

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