BAD NEWS! Food inflation in double-digit

Food inflation entered the double-digit after a gap of five months, at 10.05 per cent for the week ended August 20, as onion, fruits, vegetables and protein-based items turned more expensive.

Food inflation, as measured by the Wholesale Price Index, was 9.80 per cent in the previous week.

The rate of price rise of food items was over 15 per cent during the same week last year.

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This is the first time food inflation entered the double-digit mark since the week ended March 12, when it was at the same figure of 10.05 per cent.

As per the official data released on Thursday, prices of onion soared by 57.01 per cent year-on-year, while that of potato by 13.31 per cent during the week under review.

Fruits became dearer by 21.58 per cent and vegetables overall by 15.78 on an annual basis.

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The prices of egg, meat and fish were up 12.62 per cent, while milk and cereals became dearer by 9.22 per cent and 4.64 per cent, respectively.

However, pulses became cheaper by 4.16 per cent and wheat by 2.52 per cent year-on-year.

Overall, primary articles recorded 12.93 per cent inflation for the week ended August 20, up from 12.40 per cent in the previous week.

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Primary articles have a share of over 20 per cent in the WPI.

However, inflation in non-food articles, which include fibres, oilseeds and minerals, stood at 17.19 per cent, down from 17.80 per cent in the previous week.

Meanwhile, fuel and power inflation was at 12.55 per cent for the week ended August 20, down from 13.13 per cent in the previous week.

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Experts said resurgence in food inflation is expected to put more pressure on the government and the Reserve Bank of India.

Headline inflation, which also factors in manufactured items, fuels and non-food primary items, was at 9.22 per cent in June.

The RBI has already hiked policy rates 11 times since March 2010 to tame demand and curb inflation.

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The RBI and the Prime Minister's Economic Advisory Council had projected headline inflation to remain high at around 9 per cent till October.

Food inflation was in double digits for most of 2010, but started to moderate from March this year.

In its Economic Outlook for 2011-12 released last month, the PMEAC said that while pressure from food inflation has fallen in recent months, the rate of price rice still remains quite high, with the possibility of a further surge in coming months.