Food inflation in India in negative zone for third consecutive week

Food inflation in India stayed in the negative zone for the third straight week, at (-)0.42 percent for the week ended January 7, mainly due to fall in prices of onion and vegetables. Food inflation, as measured by the Wholesale Price Index (WPI), was at (-) 2.90 percent in the previous week. It was above 16 percent in the corresponding week of 2011. According to the official data released on Thursday, onion prices were lower steeply by 75.42 percent year-on-year during the week under review, while potato prices were down by 23.84 percent. Prices of wheat also fell by 3.57 percent. Overall, vegetables were 45.81 percent 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 percent higher during the week under review, while milk grew dearer by 11.48 percent. Egg, meat and fish prices were up 19.64 percent year-on-year. Fruits also became 10.03 percent more expensive on an annual basis, while cereal prices were up 2.26 percent. Inflation in the overall primary articles category stood at 2.47 percent during the week ended January 7, against 0.51 percent in the previous week. Primary articles have over 20 percent weight in the wholesale price index. Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 1.84 percent for the week ended January 7 against 1.29 percent in the previous week. Fuel and power inflation stood at 14.45 percent, same as in the previous week. Headline inflation, which also factors in manufactured items, fell to a two-month low of 7.47 percent in December 2011. The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation. Finance Minister Pranab Mukherjee said last week that the moderation in food prices will help to bring down headline inflation to 6-7 percent by March 2012.