India’s Food Inflation Declines To 16.23%

India’s Food Inflation Declines To 16.23% For the week ended May 22, the country's annual food inflation declined to 16.23% as against 16.49% during the previous week.

In the week under review, facts announced by the commerce and industry ministry on the wholesale price index (WPI) disclosed that both food and non-food index fell 0.1% each.

Fuel prices reduced 12.08% in the week as compared to a 12.33% increase in the last week.

The primary articles index remained up by 15.9%, compared to a rise of 16.19 percent during the previous week.

Following are the increase and decrease in prices of some essential food items over the 52-week period:

- Pulses: 33.14%
- Milk: 21.12%
- Fruits: 13.85%
- Rice: 7.27%
- Cereals: 5.88%
- Wheat: 4%
- Potatoes: (-) 32.71%
- Onions : (-) 17.24%

The overall annual rate of inflation in April was 9.59%.

The drop in inflation levels has not been as fast as the government hoped and an international development agency said Wednesday that high inflation was a problem and that the Reserve Bank of India needed to make more substantial policy rate hikes to contain it.

In a statement, Organisation for Economic Cooperation and Development (OECD) said, "With inflation remaining elevated and the recovery appearing to have taken root, there is a risk that price increases for inputs will flow through to second-round increases and that inflationary expectations will become destabilized."

"To mitigate this risk, sizeable further monetary tightening will be required through 2010 and into 2011," the statement added.

India is eyeing a normal monsoon in 2010 as more than 60% of India's cultivable land are rain-fed.

Prime Minister Dr. Singh, under attack from opposition parties for failing to check rising prices, this week pledged to almost halve the inflation rate by December. (With Inputs from Agencies)