Food prices fell for the second consecutive week as food inflation remained in the negative zone at (-)2.90 per cent for the week ended December 31, 2011.
Food inflation, as measured by the Wholesale Price Index (WPI), stood at (-)3.36 per cent in the previous week. It was above 19 per cent in the corresponding week of 2010.
According to data released Thursday, onions became cheaper by 74.77 per cent year-on-year during the week under review, while potato prices were down by 31.97 per cent.
Prices of wheat also fell by 3.35 per cent.
Overall, vegetables became 49.03 per cent cheaper during the week ended December 31.
The fall in the rate of price rise of food items since the first week of November is substantial, as it has plummeted from double-digit territory into the negative zone.
Experts feel that the decline in food inflation will be a major incentive for the Reserve Bank to look at the option of cuts in key interest rates at its next quarterly monetary policy review later this month.
However, other food products became more expensive on an annual basis, led by protein-based items.
Pulses were 14.72 per cent costlier during the week under review, while milk grew dearer by 10.79 per cent. Egg, meat and fish prices were up 15.22 per cent year-on-year.
Fruits also became 9 per cent more expensive on an annual basis, while cereal prices were up 2.03 per cent.
Inflation in the overall primary articles category stood at 0.51 per cent during the week ended December 31, as against 0.10 per cent in the previous week. Primary articles have over 20 per cent weight in the wholesale price index.
Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 1.29 per cent during the week under review, as against 0.85 per cent in the week ended December 24, 2011.
Fuel and power inflation stood at 14.45 per cent during the week ended December 31, as against 14.60 per cent in the previous week.
Headline inflation, which also factors in manufactured items, has been above the 9 per cent-mark since December, 2010. It stood at 9.11 per cent in November, 2011.
The Reserve Bank of India has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation.
In its second quarterly review of the monetary policy last month, the central bank had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7 per cent by March, 2012.
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Can manage WPI inflation if food prices keep declining: Pranab
New Delhi, Jan 12 (PTI) Expressing satisfaction over the fall in food prices for the second week in a row, Finance Minister Pranab Mukherjee said if the trend continues for some more time, overall inflation will become manageable.
"Food inflation is still negative... There is a declining trend... If this trend continues, then the overall inflation will be manageable," Mukherjee told reporters here.
His comments came after food prices fell for the second consecutive week as food inflation remained in the negative zone at (-)2.90 per cent for the week ended December 31, 2011.
Food inflation, as measured by the Wholesale Price Index (WPI), stood at (-)3.36 per cent in the previous week.
Headline inflation, which also factors in manufactured items, fuel and non-food primary items, has been above the 9 per cent-mark since December, 2010. It stood at 9.11 per cent in November, 2011.
Food inflation has a 14 per cent share in the overall Wholesale Price Index (WPI) basket.
For the government and RBI, headline inflation of around 5 per cent is the 'comfort zone'.
Last week, Mukherjee had said the decline in food prices will help bring down headline inflation to less than 7 per cent by March.
The fall in the rate of price rise of food items since the first week of November is substantial, as it has plummeted from double-digit territory into the negative zone.
The Reserve Bank had earlier said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to 7 per cent by end of the fiscal.
