New Delhi: There was year-end relief for the common man as India's annual food inflation dropped to a near six-year low of 0.42 per cent for the week ended December 17 due to a sharp decline in the prices of onions, potatoes and vegetables, official data showed Thursday.
This is the lowest level of food inflation since April 2006. After remaining stubbornly near double-digit for almost two years, food inflation has dropped sharply in the last one-and-a-half months giving much needed relief to the common people and policy makers.
Buoyed by the recent easing in food price rise, Finance Minister Pranab Mukherjee said the overall inflation based on the wholesale price index (WPI) is likely to come down to around 6 per cent by the end of the current financial year.
"If this trend continues, then by the end of the year the WPI inflation will he around 6 per cent," Mukherjee told while reacting on the weekly data.
The headline inflation based on the wholesale price index was recorded at 9.11 per cent in November, according to the latest available data.
Mukherjee said overall inflation was unlikely to come below 6 per cent because of higher inflationary pressure in the previous weeks and months.
Onion prices are less than half when compared to their price during the corresponding period of last year. Onions have become cheaper by 59.04 per cent year-on-year.
Vegetables are cheaper by 36.02 per cent, while potato prices have declined by 33.76 per cent year-on-year.
The sharp decline in the prices of onions and vegetables and overall food inflation is partly due to high base effect. Last year, there was sharp increase in the prices of onions and vegetables. Onion prices had risen by 58.54 per cent and vegetables by 36.29 per cent year-on-year for the week ended Dec 17, 2010.
Annual food inflation was at 15.48 per cent in the corresponding week of last year.
Food inflation came down to single-digit in the second week of November and has dropped consistently since then. It was recorded at 10.63 per cent for the week ended Nov 5 and at 1.81 per cent for the week ended Dec 10.
Inflation in overall primary article, which has 20.12 per cent weight in the wholesale price index, dropped to 2.70 per cent for the week ended Dec 17 as compared to 3.78 per cent in the previous week, according to data released by the ministry of commerce and industry.
Fuel and power inflation dropped to 14.37 per cent during the week under review as compared to 15.24 per cent in the previous week.
The recent drop in food inflation and easing in overall inflationary pressure may prompt the central bank to cut interest rates.
The Reserve Bank of India early this month kept policy rates unchanged after hiking the key rates 13 times since the beginning of 2010.
The following are the yearly rise and fall in prices in the week under review of some main commodities that form the sub-index for food articles:
Onions: (-) 59.04 per cent
Vegetables: (-) 36.02 per cent
Fruits: 8.46 per cent
Potatoes: (-) 33.76 per cent
Eggs, meat, fish: 11.56 per cent
Cereals: 2.15 per cent
Rice: 1.82 per cent
Wheat: (-) 3.30 per cent
Pulses: 14.07 per cent
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