Food inflation surged to a four-and-a-half month high of 9.90 per cent during the week ended July 30 on the back of costlier onions, fruits, vegetables and protein-based items.
The RBI must first deal with the adverse turn of events in the CPI.
The government said on Monday food inflation has started easing and will fall to an acceptable level of 5-6 per cent in due course, even as the Bharatiya Janata Party-led National Democratic Alliance and Left Parties went ahead with a nationwide strike to protest against rising prices.
This was the fifth consecutive week in which the rate of food prices has risen, after a spell of moderation in July and the first half of August.
The rate of price rise of food items has fallen to a single-digit figure for the first time since the week ended December 4, 2010, when it was 9.46 per cent.
The blame for the relentless ascent rests largely with the misguided agricultural marketing policies of the Centre and state governments.
Inflation in food articles category in January stood at 8.8 per cent.
The Reserve Bank of India on Friday retained its projection for retail inflation at 4.5 per cent for the current fiscal assuming a normal monsoon, while emphasising that uncertainties related to food price outlook warrant a close monitoring. Consumer Price Index (CPI)-based retail inflation has been projected at 4.5 per cent with quarter-wise projections at 4.9 per cent in Q1 (April-June), 3.8 per cent in Q2, 4.6 per cent in Q3, and 4.5 per cent in Q4.
'Challenge is basically near-term growth as the outlook has turned a bit adverse.'
The three day MPC meeting began on Monday and the decision will be announced on Wednesday by RBI Governor Shaktikanta Das.
After a strong run in the midcap and smallcap indices, which surged 46 per cent and 43 per cent, respectively, on the National Stock Exchange (NSE) during Samvat 2080, analysts suggest that the rally in these segments may pause to catch its breath in Samvat 2081.
Food inflation had remained above the 16 per cent-level for most part of the year.
After being in single-digit for two weeks, food inflation shot up again to double digit at 11.40 per cent for the week ended July 31 as prices of cereals, milk and fruit went up.
Food inflation, which was 11.40 per cent for the week ended July 31, is in double digits for the second consecutive week, after it remained in single digit for a fortnight in mid-July.
Food Inflation rose to 16.49 per cent for the week ended May 8, mainly due to high prices of vegetables and fruits.
Food Inflation rose to 16.44 per cent for the week ended May 1, mainly due to high prices of fruits and vegetables.
On a yearly basis, potato became cheaper by over 45 per cent and onion by nearly 8 per cent.
The Nifty closed at 4,845, down 86 points. ONGC, ITC and HDFC Bank were the only gainers among the index stocks. And Gail and BPCL rose on hopes of deregulation in the prices of petroleum products.
Experts said onion prices, which are seeing deflation, are also headed to high-inflation territory in the coming months.
Higher food prices can accelerate broader inflation by pushing up wages, while negatively impacting the government finances and reducing monetary policy flexibility, Moody's said in a report.
The wholesale price-based inflation fell after rising for four consecutive weeks. Inflation was at 17.97 per cent in the previous week.
Food inflation softened to 18.22 per cent as of the week ended December 26, although potato and pulses continued to cost high. The wholesale price based inflation was 19.83 per cent in the previous week.
Food inflation fell for the second straight week to a nine-week low of 11.05 per cent for the week ended February 5 as pulses, wheat and potato prices declined.
The annual rate of price rise of food items in the previous week was 16.12 per cent. Prices of pulses for the week were higher by 34.14 per cent over the corresponding week last year, while that of milk rose by 21.12 per cent on an annual basis.
The Reserve Bank is unlikely to cut the benchmark interest rate in its forthcoming bi-monthly monetary policy review later in the week as retail inflation is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts.
Food inflation eased to 16.23 per cent for the week ended May 15 on account of a fall in prices of masur, fruits and vegetables.
The inflation stood at four-month low of 16.22 per cent for the week ended March 13.
Reserve Bank Governor Shaktikanta Das on Thursday said the fundamental drivers of the Indian economy are gaining momentum and the country is moving on a sustainable growth path. In the inaugural address at FIBAC 2024, the governor said that massive changes are taking shape in various economic sectors and markets, and the country is geared for orbital shifts.
Retail inflation declined to a five-year low of 3.54 per cent in July mainly on account of subdued prices of food items, and base effect, according to official data released on Monday. The Consumer Price Index (CPI) based retail inflation was 5.08 per cent in June 2024 and 7.44 per cent in July 2023.
On an annual basis, potato prices more than doubled, pulses became expensive by over 35 per cent, while onions rose by 27 per cent.
Food prices fell for the second consecutive week as food inflation remained in the negative zone at (-)2.90 per cent for the week ended December 31, 2011.
The food inflation edged up to 13.68 per cent for the week ended October 31, from 13.39 per cent in the previous week mainly on account of soaring vegetable prices.
Snapping the downward trend of two consecutive weeks, food inflation inched up marginally to 15.57 per cent for the period ended January 15, on account of escalating vegetable prices, particularly, onions.
The Reserve Bank of India (RBI) has identified "climate shocks" as a risk to food inflation rates and overall price rise while stating that the outlook for the country's economic growth remains bright. In its Annual Report for 2023-24, released on Thursday, the central bank said easing supply-chain pressures, broad-based softening in core inflation, and early indications of an above-normal southwest monsoon meant well for the inflation outlook in 2024-25. "The increasing incidence of climate shocks, however, imparts considerable uncertainty to the food inflation and overall inflation outlook," said the RBI while noting headline inflation moderated by 1.3 percentage points on an annual average basis to 5.4 per cent in 2023-24.
The decline could also be attributed to the high inflation figure of 18.56 per cent for the corresponding year-ago period, a phenomenon dubbed the 'high base effect' in economic parlance.
As per data released by the government on Thursday, pulses became over 9 per cent cheaper year-on-year during the period under review.
This is the lowest rate of price rise in food items in the last 18 months, when separate data for food inflation first started coming in.
Food inflation soared to 17.05 per cent for the week ended January 22, rising for the second straight week, on the back of costlier vegetables, fruits and milk.
S&P Global Ratings on Tuesday retained India's growth forecast at 6.8 per cent for the current fiscal and said it expects the RBI to start cutting interest rates in its October monetary policy review. In the economic outlook of Asia Pacific, S&P Global Ratings also retained its GDP growth forecast for the 2025-26 fiscal at 6.9 per cent and said solid growth in India will allow the Reserve Bank to focus on bringing inflation in line with its target.
Food inflation in April stood at 6.08 per cent, while the overall WPI inflation fell to a three-year low of 4.89 per cent.
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