Food Inflation Continue To Remain In Negative Territory For Fourth Week In A Row (27-Jan-2012)
India's weekly food inflation, measured by the Wholesale Price Index (WPI), continued to remain in the negative terrain for the fourth consecutive week in the week ended January 14, 2012 as it moderated to -1.03 from its previous levels of -0.42% for the week ended January 7. The decline in inflation can largely be attributed to drop in the price of vegetables, especially onions and potatoes and wheat.
Owing to the sharp slump in the rate of price rise in the recent times, the Reserve Bank of India in a surprising move cut the cash reserve ratio for the first time since 2009 and hinted at future interest-rate cuts in its policy review meet earlier in the week. The RBI, even while maintaining its anti-inflationary stance attempted to ease the tight liquidity pressure on the economy by cutting the CRR and infusing Rs 32,000 crore into the Indian banking system. The central bank lowered its economic growth forecast for the current fiscal to 7% from 7.6% earlier, in addition credit growth estimates too were lowered to 16% from 18% while the central bank kept inflation forecast unchanged.
According to the data released by the Ministry of Commerce and Industry, the index for 'Food Articles' group rose by 0.3% to 191.4 from 190.9 for the previous week due to higher prices of bajra (4%), fish-marine and jowar (3% each), ragi and barley (2% each) and wheat, maize and milk (1% each). However, the prices of fruits & vegetables, egg, gram, moong and condiments & spices (1% each) declined.
The index for 'Non-Food Articles' group declined by 1.5 percent to 179.9 from 182.6 for the previous week due to lower prices of flowers (18%), raw cotton (7%), sunflower (3%) and raw rubber, castor seed and copra (1% each). However, the prices of gaur seed (17 %), groundnut seed (3%) and raw jute, coir fibre, linseed, soyabean, rape & mustard seed and mesta (1 % each) moved up.
As a result, the index for 'Primary Articles', which accounts for 20.12% of the WPI, remained unchanged at its previous week's level of 199.1 for the week ended January 14. The annual rate of inflation, calculated on point to point basis, stood at 1.89% for the period under consideration as compared to 2.47% for the previous week.
Meanwhile, the index for Fuel & Power group which carries a weightage of 14.91% in WPI remained unchanged at its previous closing levels of 172.7 in the week while annual rate of inflation calculated on point to point basis too stood unchanged at 14.45% in the first week of the year 2012.
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