Food inflation rose marginally to 17.87% for the week ended February 20 on the back of higher prices of milk, wheat, rice and vegetables. The figure in the previous week was at 17.58%. On an annual basis, price of rice increased 10%, wheat 14%, pulses 35%, onions 11% and potatoes 28%.
Inflation in fuel, power light and lubricant group was 9.59%, slightly lower than 9.89% in the previous week. However, it is expected to surge significantly next week when the impact of the fuel price hike would be reflected in the index.
The Budget last week raised customs duty on petrol and diesel to 7.5% from 2.5%, while excise duty was raised by Re 1 on non-branded (normal) petrol and diesel. This saw the oil companies immediately hike prices. Beginning February 27, petrol prices rose by Rs 2.67 a litre and diesel by Rs 2.58 per litre in Delhi.
FM Pranab Mukherjee on Wednesday had blamed the multi-level supply chain system for stoking prices of food articles in the country. "Particularly with regards to food, I do agree that the cost of intermediation is very high from farm gate to the wholesale markets and from wholesale markets to retail markets," he had said.
"And how to reduce the cost of intermediation is one of the terms of reference of the PM-appointed core committee of chief ministers, in which the agriculture minister and Planning Commission deputy chairman and I are members," Mukherjee had said.
The cost of intermediation is abnormally high, he said, and admitted that perhaps it requires more competition. One way to increase competition is to improve the distribution channels, and set up physical infrastructure for post-harvest storage, he said.
During the week, the price of milk rose by 1% and fish by 3%, while prices of fruits and vegetables, gram and barley eased by 3% each. At the same time, tea, wheat, eggs and arhar became cheaper by 1% each. But the non-food articles group rose by 0.1% on account of higher prices of raw jute and raw rubber by 4% each.