Food price graph on the rise again

Food price inflation rose for the second week running in the week ended 29 May, fuelling speculation that the Reserve Bank of India may further tighten monetary policy. The upward trend was due to a rise in the prices of essential commodities such as fruit, pulses and milk.

The wholesale food price index climbed to 16.74 per cent for the week compared with 16.55 per cent in the previous week. The unabated increase in the prices of essential items is expected to force the RBI to tighten the liquidity in the system in the first quarter review of monetary policy on 27 July.

Prices of pulses rose 31 per cent, milk by over 21 per cent, and fruits by 18.7 per cent. Consumer staples such as rice and wheat turned costlier by 7 per cent and 3 per cent respectively.

Altogether, the increase in prices pushed up food inflation by 0.19 percentage points in the week under review. The silver lining was that potatoes and onions eased by 30.87 per cent and 12.27 per cent respectively

The fuel price index also climbed 14.23 per cent on a year-on-year basis, up from the previous week's 14.14 per cent, government data released on Thursday showed.

During the week, the primary articles group index increased 0.5 per cent to 301.7 points from 300.3 points.