Food inflation rose marginally to 11.49 per cent for the week ended February 12 from 11.05 per cent in the previous week, driven by rising prices of milk, egg, meat and vegetables.
The time is ideal for a 'Dream Budget' akin to the 1991 reforms that sparked high growth and unlocked significant gains in productivity, points out Rajeswari Sengupta.
'The central bank has highlighted that the slowdown in growth has been limited to a few sectors and overall growth is expected to pick up in the second half of the year.'
Central bank said structural sources of food price pressures continue to persist.
The rate of price rise of food items was over 15 per cent during the same week last year.
Food inflation remained in the negative zone for the third straight week, at (-)0.42 per cent for the week ended January 7, mainly due to fall in prices of onion and vegetables.
According to data released by the government on Thursday, onions became cheaper by 39.20 per cent year-on-year during the week under review, while potato prices were down by 15.75 per cent.
The October-December quarter (Q3FY25) results of fast moving consumer goods (FMCG) major Hindustan Unilever (HUL) indicated weak demand, with urban growth muted and rural showing recovery. Consolidated revenue grew by 1.6 per cent (volume was flat) to Rs 15,818 crore, due to price hikes. Prices of key raw materials such as palm oil and tea remained elevated, leading to compression of gross margin.
'The finance minister has done as much as she can when you look into the fiscal constraints she had.'
The Reserve Bank on Wednesday retained the retail inflation projection at 4.5 per cent for fiscal 2024-25, with Governor Shaktikanta Das stressing that the central bank will have to closely monitor the price situation and keep the "inflation horse" under tight leash lest it may bolt again. Unveiling the October bi-monthly monetary policy, the Governor also said the flexible inflation targeting (FIT) framework has completed 8 years since its introduction in 2016 and is a major structural reform of the 21st century in India.
Finance Minister Pranab Mukherjee termed the rise in food inflation as an area of 'grave concern'.
Hit by inflation, higher input costs and pricing measures, fast-moving consumer goods companies are expected to see a contraction in their gross margin and a modest-to-flat operating profit in the October-December quarter. Several FMCG makers are likely to log a low single-digit rise in their revenue, returning to the cycle of value-driven growth.
'The RBI's MPC will maintain the current policy rates (6.50%) at the policy meeting, given ongoing inflationary pressures.'
With a sub-normal monsoon looming, the government is worried about spiralling food inflation and its debilitating impact on the nascent economic recovery.
This is the second consecutive week when the rate of price rise of food items has gone up after a period of moderation in February and March.
Expressing confidence, Food Minister K V Thomas said on Friday the government is not 'worried' about food inflation, which is showing a decline trend and may come down to 7 per cent soon.
Snapping the five week rising trend, food inflation softened to 16.91 per cent for the week ended January 1, 2011.
Food inflation, as measured by the Wholesale Price Index, stood at 9.01 per cent in the previous week, while it was over 21 per cent in the first week of June last year.
Food inflation increased in the week ended September 18 as the prices of cereals, fruits, select vegetables and milk rose on account of supply disruptions caused by heavy rains and floods.
Inflation stood at 13.99 per cent in the corresponding period last year.
RBI in its monetary policy review on Friday is expected to suck out liquidity from the system to prevent spread of inflation to manufactured items.
The food inflation, which was over 20 per cent in December 2009, slipped to single digit figure in the third week of July. The overall inflation, which include change in prices of manufactured goods, was 10.55 per cent during June.
Even as the high inflation figure for October has ruled out any possibility of a rate cut by the Reserve Bank of India's (RBI's) monetary policy committee (MPC) in December, a rate cut in February also looks uncertain due to global uncertainties. Economists told Business Standard that unless domestic growth slows markedly, the outlook on rate cut remains unclear. India's headline inflation touched a 14-month high of 6.2 per cent in October, breaching the MPC's upper tolerance band of 6 per cent.
Economists forecast the benchmark food price indicator to slip to 12 per cent in near future
The Reserve Bank on India on Thursday said that high inflation, primarily driven by food prices, has begun to spread to the broader economy now, but it is likely to ease in the coming months on the back of an expected moderation in food prices with the arrival of fresh crops.
Retail sales of vehicles across categories in India grew by 11.21 per cent at 32,08,719 units in November, as compared to 28,85,317 units in the same month last year riding on two-wheeler demand, Federation of Automobile Dealers Associations said in Monday. Retail sales of two-wheelers were at 26,15,953 units last month, as compared to 22,58,970 units in November 2023, a growth of 15.8 per cent buoyed by the festive spillover.
Potato prices remained high recording an increase of 115 per cent on a year-on-year basis, followed by pulses whose prices jumped by 41.61 per cent. Vegetables as a whole turned expensive by 37.97 per cent.
'If it doesn't, it will continue with measures to infuse liquidity, signalling a new cycle,' predicts Tamal Bandyopadhyay.
The Reserve Bank on Friday raised the inflation projection for current fiscal year to 4.8 per cent from 4.5 per cent with Governor Shaktikanta Das saying lingering food price pressures are likely to keep headline inflation elevated in the December quarter. Consumer price index (CPI)-based inflation increased sharply in September and October 2024 led by an unanticipated increase in food prices.
Retail inflation breached the Reserve Bank's upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month. Retail inflation trended below the RBI's upper tolerance band of 6 per cent since September last year.
Food inflation, which remains remarkably high at over 12 per cent, could be tamed through innovative agriculture business models, a KPMG report said.
'The shifts in US involvement in global conflicts and geopolitical alliances could introduce uncertainties.'
This is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis.
From the outcome of the general elections and then Union Budget to tepid corporate earnings in the September 2024 quarter (Q2-FY25), sticky inflation and Reserve Bank of India's stance on interest rates, extreme weather conditions, Indian stock markets have braved it all in calendar year 2024.
Overall, vegetables were 47.06 per cent cheaper during the week under review, from the same period last year.
Food inflation is back in double digits after a gap of a month-and-a-half and stood at 10.60 per cent for the week ending October 8 on the back of costlier vegetables, fruits, milk and protein-based items.
Driven by high vegetable prices, the food inflation is in double digit for the past two months and even crossed 18 per cent in the last week of December 25.
India's food inflation was the second lowest among all emerging economies in the 2010.
High vegetable prices are expected to keep food inflation firm in the months to come.
In May 2019, the food inflation was 1.83 per cent as per the full CPI data released for that period.
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