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Food inflation sharply falls to 13.07%, may stabilise at 8-9%
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Friday, 11 February, 2011, 08 : 00 AM [IST]
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Our Bureau, New Delhi
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Food inflation dropped sharply to 13.07% for the week ended January 29 from 17.05% in the previous week. According to data released by the ministry of industry and commerce on Thursday food inflation declined to a seven-week low due to decline in the prices of pulses and potatoes. On an annual basis, prices of potatoes declined 8.87%, while pulses fell 8.63% and wheat by 3.58%, the government data said.
Although the prices of onion have softened to a large extent in the domestic market because of arrival of late kharif crop, it remained dearer by 78.64% in comparison to last year. The overall vegetable prices increased by 44.34% on an annual basis. Fruits and milk became costlier by 10.46% and 11.66% on an annualised basis.
The last time food inflation had such drastic fall was when the food inflation was reported at 12.13% for the week ended on December 11 last year.
Analysts said there would be further drop in food inflation in short term because of anticipated record rabi / winter harvest. “Due to record food production food inflation would remain on lower side in short term while fluctuations would be there in the long run because of supply constraints,” P K Joshi, director, National Academy of Agricultural Research Management, a Hyderabad-based institute affiliate to ICAR, said.
Finance minister Pranab Mukherjee said the decline in food and primary articles inflation was welcome but there was a need to remain vigilant. He said he would not like to over-interpret the weekly data. Economists, however, said food inflation was expected to ease in the coming weeks and would settle around 8-9% but pressure would still remain.
Govt expects bumper grain harvest, fall in food inflation
India would harvest its second highest food grains output in 2010-11, including a record 81.47mt of wheat, agriculture minister Sharad Pawar said on Monday. This could help the government rein in food inflation.
The country is likely to harvest 232.07mt of grains in 2010-11, sharply higher than the 218.11mt produced a year ago, when a severe drought hit India’s crops. Food grains production hit a record 234.47 mt in 2008-09. “We succeeded in raising grain production because of higher support prices,” Pawar said, highlighting a sharp rise in the level set by the government as a minimum for rice and wheat in the past few years.
Even more significant is the pulses output which, for the first time, will cross the 15mt mark and touch 16.51mt. Likewise the production of maize is estimated at 20.03 mt, thereby scaling the 20-mt barrier. Apart from these major crops, production of tur and sesamum are also reckoned to touch new highs of 3.18 mt and 0.83mt, respectively.
The other notable news is in sugar cane, where the ministry has revised upwards the size of the 2010-11 crop to 336.698 mt from the 324.912 mt in the first advance estimate. Whether this would translate into higher sugar production – relative to the current official estimate of 245 lakh tones (24.5mt) is to be seen.
Pwar said the government should adopt a liberal approach in deciding on exports of food grains and vegetables. He stressed the need of exports of sugar to support local farmers and mills, a key concern in the farm portfolio. “After protecting domestic consumers’
Interests, one can think about sugar exports. Cane areas are rising and farmers are demanding exports to be allowed,” he said.
The government should also allow exports of onions and adopt a more friendly policy in exports of premium grade rice like Basmati that the middle and lower middle class consumers did not consume, Pawar said.
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