In your interest.
Online Personal Finance Magazine
No beating about the bush.
Though a range of essential items still continue to be expensive, the rate of price rise has been falling for some time now
The Reserve Bank of India (RBI) on Thursday said that high inflation, primarily driven by food prices, has started spreading to the broader economy but it is likely to ease on the back of an expected moderation in food prices, reports PTI.
"Inflation is now broad-based and spreading to areas other than food, especially manufacturing, and is not just restricted to food inflation," RBI's deputy governor, Subir Gokarn, told reporters in Mumbai.
Food inflation dropped to 17.81% towards the end of February, but fuel inflation shot up due to a hike in excise and customs duty in the Budget.
While food prices are expected to moderate further in the weeks ahead, the overall inflation may hit double digits by fiscal end as manufactured and fuel prices are going to get costlier, say experts.
"Food inflation will moderate. However, other inflation like fuel and manufactured inflation will firm up, also because of low inflation last year," CRISIL's principal economist DK Joshi said. Overall inflation will reach 10% by March-end, he said.
Food inflation declined by 0.06 percentage points during the week ended 27th February from 17.9% in the previous week.
The wholesale price index (WPI) inflation rose to 8.56% in January, breaching the RBI's end-March projection of 8.5%.
Though a range of essential items still continue to be expensive, the rate of price rise has been falling for some time now. The declining trend, if sustained, would buttress the government's confidence that prices will start easing from April onwards.
On year-on-year pulses were dearer by 33.38%, slightly lower than over 35% in the previous week, while potatoes turned costlier by 22.46%. Onion rose by just 2.98%.
Overall vegetable prices shot up by 15.61%, while milk prices was up 15.31% and fruits 11.77%.
The declining trend, if sustained, would buttress the government's confidence that prices will start easing from April onwards, but a lot depends on Rabi (winter) crops, say experts.
Mr Gokarn said that food price-inflation is likely to ease moving ahead on the back of an expected good Rabi crop, although certain commodity prices may stay high.
"We are in the early part of rabi harvest and there is a growing confidence that the harvest is reasonably good, although there will be pressure on specific commodities-- overall we should see some moderation in food prices," he added.