Soaring onion and other vegetables’ prices led to a sharp rise in inflation at 18.32% for the week ended December 25, a development that may prompt the Reserve Bank to tighten monetary policy to check further escalation in commodity costs. Food inflation jumped up by 3.88 percentage points from 14.44% recorded in the previous reporting week, and edged closer to the high level of 19.90%, last witnessed a year ago.
The rise in food inflation has been mainly on account of 58.58% rise in prices of vegetables in the wholesale market. Among the individual items, onion became dearer by 82.47% on annual basis, while egg, meat and fish became costlier by 20.83%, fruits by 19.99% and milk by 19.59%.
The data further reveals that onion prices during the one week period ending December 25, rose by 23.01% in the wholesale market.
With food inflation accelerating, RBI may take more measures in its forthcoming quarterly review of the monetary policy on January 25. The central bank during 2010 had raised short-term key policy rates six times to tame inflation. Meanwhile, in the non-food category, the prices of fibres and minerals have climbed by 35.53% and 30.58%, respectively. Rising food prices will reflect on the monthly inflation data for December, scheduled for announcement on January 14. The overall inflation in November had come down to 7.75% from 8.58% a month ago. – HT