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India’s annual food inflation up by 15 percent

New Delhi, Sep 16 (Calcutta Tube) India’s annual food inflation shot up to 15.1 percent for the week ended Sep 4 from 11.47 percent the week before, due primarily to a shift to a new base year for the wholesale price index and fresh weights assigned to commodities.

The index has dramatically risen by as much as 5 percentage points in a matter of three weeks, from 10.05 percent for the week ended Aug 14 and 10.86 percent for the following week, as per data available with the commerce and industry ministry.

The annual inflation rate for the primary articles group also inched up higher to 16.22 percent from 15.4 percent for the week ended Aug 28, while that for fuels declined to 11.48 percent from 12.71 percent.

The government had Tuesday shifted the base year for the official wholesale price index to 2004-05, from the earlier 1993-94, and added as many as 241 new items to its basket of commodities. The weights for individual commodities were also altered.

The fresh data on the index numbers came against the backdrop of India’s central bank Thursday hiking its short-term borrowing and lending rates by 50 basis points and 25 basis points respectively to continue its tight monetary policy stance to tame prices.

Conducting a review of the monetary policy, Reserve Bank of India (RBI) Governor D. Subbarao said though India’e growth remained stable, the recent volatility in industrial output remained a concern, along with inflationary expectations that still loomed large.

‘Inflation rates have reached a plateau but are likely to remain at unacceptably high levels for some months. The prices of food articles, which rose by 14 percent in August are still contributing to the pressure,’ Subbarao said.

‘The headline inflation remains significantly above the trend of 5-to-5.5 percent in the 2000s. There is, therefore, need for continued policy response to contain inflation and anchor inflationary expectations,’ he added.

Following are the rise and fall in prices of some of the main commodities that form the sub-index for food articles over the past 52 weeks:

Cereals: 7.16 percent

Rice: 5.74 percent

Wheat: 10.16 percent

Pulses: 6.01 percent

Vegetables: (-)3.82 percent

Fruits: 8.27 percent

Milk: 23.41 percent

Potatoes: (-)45.92 percent

Onions: (-)4.17 percent

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