Food inflation shoots up to 11.47 per cent

Food inflation shot up to 11.47 per cent for the week ended August 28, the second consecutive week of upward thrust, even as Prime Minister Manmohan Singh had expressed hope on Wednesday that prices will moderate in the coming months.

The rise was mainly on account of spurt in prices of cereals, fruits and milk. Food inflation was 10.86 per cent for the week ended August 21.

Experts said the figures will stabilise by next month, when the fresh kharif crops will arrive in the market.

"It (food inflation) will start coming down by October-November with the new harvest's arrival," Crisil Chief Economist, D K Joshi, said. Minor ups and downs in the rate of food inflation are due to seasonality, he added.

"The week-to-week variation happens during the monsoon season. However, this year the rainfall has been sufficient to result in a good crop," Joshi said.

Prime Minister Manmohan Singh said on Wednesday inflation will come down in the coming months. "Let us hope, it (inflation) comes down in the coming months. I am not an astrologer," he had said.

In July, Singh had told a National Development Council meeting that overall inflation would come down to about 6 per cent by December this year.

On an annual basis, cereals turned expensive by 5.07 per cent for the week ended August 28. Within the group, prices of pulses soared 13.44 per cent, while rice and wheat increased 4.74 per cent and 7.04 per cent, respectively.

Among other food items, milk prices became dearer by 17.60 per cent during the week, compared to the same period last year, while that of fruits went up 10.34 per cent.

However, vegetable prices went down substantially during the week under review. Compared to last year, vegetables were 9.38 per cent cheaper. Within vegetables, potato was cheaper by 50.44 per cent, while onion went down by 10.32 per cent on an annual basis.

"The new harvest is not available as yet, even as stockpiles of many items from the last harvest are being utilised. Besides, overall demand is also up," said  Rajiv Kumar, senior economist and former director of Indian Council of Research in International Economic Relations(ICRIER). Heavy rainfall in some regions has disrupted transportation and hampered supplies, he added.

"However, fresh crop is on the way and we may see food prices stabilise," Kumar said.

Overall inflation, based on wholesale prices, had declined to single digit in July at 9.97 per cent, after being in double digit for five months. August's inflation figures are expected next week.