Food inflation fell to a one-and-half month low of 7.78% for the week-ended June 18 aided by cheaper vegetables and pulses but experts warned that prices will again surge in the coming weeks as the knock-on effects of a hike in fuel prices cascade through the economy.
Food inflation was 9.13% in the previous week. Last week, the government raised diesel, kerosene prices and cooking gas prices by Rs 3 a litre, Rs 2 a litre and Rs 50 a cylinder — a move that is bound to have a domino effect on most expenses, from transport to food.
This steep hike in auto and cooking fuel prices, coming barely a month after a steep Rs 5 a litre hike in petrol prices, will further pinch household budgets.
To make matters worse, petrol will be costlier by 27 paise a litre and diesel by 15 paise a litre from Friday because of an increase in the commission to petrol pump dealers.
“The fuel price hike could add another 1.1 percentage points to headline inflation,” said Siddharth Sanyal, economist at Barclays bank. India’s inflation in May was 9.06%.