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New Delhi: Food inflation fell sharply by 2 percentage points to 10.3% for the week ended 6th November from 12.3% in the previous week, raising hopes that overall inflation may decline to around 6% by the end of the year, as predicted by the government, reports PTI.
Inflation stood at 13.99% in the corresponding period last year. This is the first time in a long time that food inflation for a particular period was lower than the corresponding period of the previous fiscal.
The decline may prompt the Reserve Bank of India (RBI) to halt its monetary tightening drive to boost industrial growth, which had fallen to a 16-month low of 4.4% in September.
The price of most food items declined during the week on improved availability after the end of the monsoon. Even onions, which have become quite expensive due to crop damage in the major producing state of Maharashtra, rose by just 0.63% during the week under review.
On a yearly basis, however, the price of protein-based food items became significantly costlier. While the price of eggs, meat and fish rose by over 33%, milk prices jumped by more than 25% and pulses rates shot up by 19.4%.
Furthermore, wheat prices rose by over 11%.
Besides food items, minerals became over 27% costlier on a yearly basis for the week ended 6th November.
Earlier this year, prime minister Manmohan Singh had exuded confidence that overall inflation will come down to 6% by the end of this year.
Meanwhile, the wholesale price index (WPI) based inflation fell for the second consecutive month to a nine-month low of 8.58% in October. The 0.04% decline in inflation from 8.62% in September is significant, given that inflation stood at just 1.48% in the same month last year. As a result of the low base in September, 2009, the rate of inflation in September, 2010, appears elevated, which is known as the “base effect”.