After showing signs of moderation, food inflation returned to pinch household budgets at 11.40 per cent in the last week of July as prices of cereals, fruits and milk rose.

With the exception of two weeks in July 2010 when it was in single digit, food inflation has been in double digits ever since the government started bringing out separate data for the segment from late last year.

Inflation in food items was 9.53 per cent in the previous week.

Analysts and experts, however, believe that the return to double-digits was expected and that the rate is likely to go down in the next few months as a good monsoon brings bountiful kharif harvest.

"Food inflation is not a surprise at all... Last year in this week it fell sharply and then increased again so increase in the food price inflation is pure (low) base effect," Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

A low base effect is when low numbers of last year make even a small rise now seem large.

Ahluwalia said the food prices are likely to move on a downward spiral in a month.

"A number of measures have been taken (to manage inflation). In a month or so, we would definitely see that (food) inflation rate would come down," Ahluwalia said.

Experts said that RBI, which has already raised policy rates thrice this year, will continue to follow a tight monetary stance in its review next month. The central bank will not be guided by just a weekly figure for food inflation, they said.

On an annual basis, cereals turned expensive by 6.97 per cent. Within this group, prices of pulses soared by over 20 per cent, while rice and wheat increased by 6.89 per cent 7.93 per cent, respectively.

However, vegetables, marine fish and barley turned cheaper by one per cent. Compared to last year, vegetables were less expensive by 6.09 per cent. Within vegetables, potatoes were cheaper by 42.18 per cent.

After showing decline for many months, onion prices climbed up marginally by 0.32 per cent on an annual basis.

"The fact that food inflation has again went to double- digit is worrying. However, we believe it will eventually fall once the full effect as a good monsoon will lead to increased supply of food products from the kharif crop," Crisil Chief Economist D K Joshi said.

He, however, said that the RBI is unlikely to make any changes in its policies based on upswing in the food inflation during just one week. .


National Council for Applied Economic Research (NCAER) chief statistician Rajesh Shukla said: "The overall trend is one of decline even though food inflation may have gone up during one week."

He said the impact of food prices would also lead to decline in overall inflation figures.

Facing the Opposition attack in the Lok Sabha on the issue of price rise, Finance Minister Pranab Mukherjee had last week sought the cooperation of the states in taming food prices, while dismissing the charge that the Centre is insensitive to the plight of the common man.

Overall inflation based on wholesale prices was in double digits at 10.55 per cent in June. The figure for July will be out in about four days.