Food Inflation eased marginally to 8.06 per cent during the Week ended 21 May 2011

Food inflation eased marginally to 8.06 per cent during the week ended 21 May 2011 from 8.55 per cent in the week ending 14 May 2011 owing to a fall in the prices of wheat, pulses and vegetables. The price volatility in non-food items however continued to be a cause for concern as the inflation in this primary article segment remained above 20 per cent.

Even as food inflation, as measured by the Wholesale Price Index (WPI), at slightly over 8 per cent during the week was way lower when compared to 21.15 per cent during the third week of May, 2010, the inflation in non-food primary articles eased only marginally to 21.31 per cent. The high rate of inflation in the in non-food primary articles category was mainly due to the Rs.5 a litre hike in the retail prices of petrol following which the motor fuel was up 32.41 per cent on a year-on-year basis.

Prices of pulses eased by 9.22 per cent and that of wheat turned cheaper by 0.77 per cent in the week ending 21 May 2011. Vegetable prices were lower by 1.06 per cent on a yearly basis, while potatoes became cheaper by 2.15 per cent. However, milk turned dearer by 7.04 per cent while eggs, meat and fish were also 5.50 per cent costlier. Other food items also turned more expensive with prices of fruits up 30.51 per cent and onions by 12.32 per cent on an annual basis.

Fuels and food together have a 29% weight in the wholesale price index. The inflation in these baskets suggests that the headline inflation for May 2011 is unlikely to moderate sharply from 8.66% for April 2011.