Food inflation at 20-month low of 7.33 pc

New Delhi: Food inflation fell to its lowest level in 20 months at 7.33 per cent for the week ended July 16 on the back of cheaper pulses, even as other items grew more expensive.

Food inflation, as measured by Wholesale Price Index (WPI), stood at 7.58 per cent in the previous week.

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.

The latest figure is the lowest since separate data for food inflation was first released in November, 2009.

During the week under review, prices of pulses fell by 8 per cent year-on-year. However, prices of other items went up.

Onions became more expensive by 22.66 per cent and fruits became 13.90 per cent dearer on an annual basis.

Potatoes became 10.55 per cent costlier, while milk was up 9.96 per cent. Vegetable prices were up by 7.59 per cent year-on-year.

Overall, primary articles recorded inflation of 10.49 per cent for the week ended July 16, down from 11.13 per cent in the previous week. Primary articles have a share of over 20 per cent in the WPI.

However, inflation of non-food articles went up to 16.05 per cent from 15.50 per cent in the previous week.

Furthermore, fibres became more expensive by over 28 per cent and oil seeds were up 13.72 per cent. Minerals became dearer by 23.12 per cent year-on-year.

Meanwhile, the index for fuel and power stood at 12.12 per cent.

The moderation in food inflation is expected to come as a relief for the government and the Reserve Bank, who have adopted a series of measures for battling inflationary pressure.

Headline inflation stood at 9.44 per cent in June. The RBI has already hiked interest rates 11 times since March, 2010, to tame demand and curb inflation.

In its quarterly review earlier this week, the RBI raised its overall inflation projection for March, 2012, to 7 per cent from 6 per cent estimated earlier, "in view of the domestic demand-supply balance, global trends in commodity prices and the likely demand scenario."