A drop in the prices of pulses and vegetables brought food inflation down to a four-month low of 16.30 per cent for the week ended March 6.
Vegetable prices dropped by 10 per cent and pulses by four per cent, bringing overall food inflation down from 17.81 per cent the week before. Food inflation had reached an 11-year high of 19.8 per cent last December.
However, the drop was cold comfort for consumers as fuel inflation rose to 12.68 per cent for the same week compared to 11.38 per cent the earlier week.
Rising inflationary pressure could prompt the RBI to hike interest rates. “The RBI may want to wait for a few weeks more to see whether food prices decline as a consequence of better rabi harvests,” Prime Minis-ter’s Economic Advisory Council chairman C. Rangarajan said.