Food inflation climbed sharply to cross 8 per cent after a two-week long declining trend, even as fuels held steady.
The annual food inflation estimate, based on the Wholesale Price Index, rose 8.04 per cent during the week ended July 23, up from the previous week's annual rise of 7.33 per cent. The surge in the pace of food inflation happened despite a decline in the food index level, which clearly reflects the base effect coming into play.
On a week-on-week basis, the index for food articles fell a marginal 0.6 per cent. On an annual basis though, items such as onions, fruits and milk continued to witness high inflation levels.
The fuel price index increased 12.12 per cent year-on-year, the same growth as reported in the previous week, Government data released on Thursday showed. The primary articles index was up 10.99 per cent, compared with an annual rise of 10.49 per cent a week earlier. Primary articles have a share of over 20 per cent in the WPI.
Interest rates
In a bid to curb runaway inflation, the RBI had, last week, hiked interest rates by 50 basis points. Headline inflation had surged to 9.44 per cent in June, data released last month showed. According to ICRA, food inflation is expected to average around 8 per cent during the month of July 2011 and may rise above 9 per cent in August 2011 on account of an adverse base effect.
During the latest reported week, onions surged over 26 per cent on an annual basis, while fruits were up 16 per cent. Milk and vegetables surged by over 10 per cent, while cereals were up by 5.13 per cent. Pulses bucked the trend to dip by over 7 per cent on an annual basis. Inflation in non-food articles, which include fibres, oil seeds and minerals, was recorded at 15.60 per cent during the latest reported week, lower than the 16.05 per cent in the previous week.