Food inflation remains in negative for third week

Food inflation remained in the negative zone for the third straight week, at (-)0.42% for the week ended January 7, mainly due to fall in prices of onion and vegetables.

Food inflation remained in the negative zone for the third straight week, at (-)0.42% for the week ended January 7, mainly due to fall in prices of onion and vegetables.

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Food inflation, as measured by the Wholesale Price Index (WPI), was at (-) 2.90% in the previous week. It was above 16% in the corresponding week of 2011.

According to the official data released on Thursday, onion prices were lower steeply by 75.42% year-on-year during the week under review, while potato prices were down by 23.84%. Prices of wheat also fell by 3.57%.

Overall, vegetables were 45.81% cheaper during the week under review than in the same period last year.

Other food products, led by protein-based items, became more expensive on an annual basis.

Pulses prices were 14.27% higher during the week under review, while milk grew dearer by 11.48%. Egg, meat and fish prices were up 19.64% year-on-year.

Fruits also became 10.03% more expensive on an annual basis, while cereal prices were up 2.26%.

Experts feel that the decline in food inflation, along with moderation in headline inflation during December 2011, will be a major incentive for the Reserve Bank to look at the option of cuts in key interest rates in the near future.