India's food inflation inches up to 18%: Government

Food inflation inched closer to 18% in the first week of February, but the government was optimistic that prices of essential commodities will begin easing from April when winter crops are harvested.

Wholesale prices-based food inflation rose to 17.97 %as of February six, up marginally from 17.94 %a week ago. Higher food inflation will weigh heavily on overall inflation, which has already crossed RBI's projection of 8.5%.

Overall inflation rose to 8.56 %in January and there were
apprehensions that it would touch 10 %by March end. In fact, it may rise further if the government decides to hike petroleum prices.

Prices of pulses rose 38.04 %during the week ended February six from the year-ago period. Similarly, potatoes were expensive by 38.02%, while overall vegetables were costlier by 19.56 per cent.

Food and agriculture minister had yesterday said, "We have to admit prices of important items like rice, wheat, pulses and sugar are showing declining trends... The situation (of high food inflation) will change after March-end."

Pawar's confidence is based on good prospects of rabi crops - wheat and pulses - which are due for harvest from April. However, HDFC Bank economist Jyotinder Karu said, "It (food inflation) will remain at elevated level, unless there is a spectacular rabi crops."

With food prices not showing signs of abating and only the rate of price rise in case of some commodities coming down, the issue is all set to become a political scoring point between parties when Parliament meets for the Budget session beginning next week.

Describing the current rate of inflation as disturbing, finance minister Pranab Mukherjee had said yesterday, "We have taken adequate measures on the supply side, which will take some time to have the pressing impact on rising prices particularly of essential commodities. I do hope that over a period of few months, it will be possible to have the moderate rate of inflation."

However, Crisil principal economist DK Joshi said food inflation is unlikely to come down quickly. Pawar had said the crop condition of wheat and pulses is good so far and the country may harvest more wheat than last year's record production of 80.68 million tonnes.

In fact, wheat prices rose by 15.78 %during the week ended February six against 15.47 a week ago. Similarly, rice turned expensive by 9.64%.

Oilseeds were costlier by 15.11%, while fruits prices went up by 10.39% in the week under review compared to the year-ago period. Analysts expect inflation to shoot up if petroleum prices are hiked.