Food inflation up to 8.76 pc
Amid concerns of rising inflation, RBI Governor D Subbarao is expected to hold consultations with Finance Ministry officials before firming up proposals for the annual credit policy to be announced on May 3.
"We will talk with RBI Governor before he announces the monetary policy. We will have a discussion," Finance Minister Pranab Mukherjee said.
He, however, maintained that the latest food inflation numbers are in line with recent trends.
"… as far as April 16 is concerned it has been on the same lines. There has been some marginal variations. More or less the trend that was noticed on April 9… the same trend in being maintained," Mukherjee said.
Experts, however, said the rising food prices, coming on top of increasing commodity prices, would force the RBI to go for another round of hike in key policy rates next month.
"The marginal increase in the weekly food inflation rate is statistically insignificant. Of larger relevance is the persistent level of headline inflation," Deloitte, Haskin & Sells director Anis Chakravarty said.
Food inflation went up marginally from 8.74 percent in the previous week. The latest number of 8.76 per cent is also the highest in three weeks, after a brief phase of downward trend in March.
During the week under review, fruits became dearer by 28.43 per cent year-on-year, while egg, meat and fish prices went up by 12.14 per cent. Onions became expensive by 10.96 per cent.
Headline inflation has been above 8 per cent since January 2010.
As per latest data, it stood at 8.98 per cent in March this year, which is above the government`s projection of 8 per cent.
RBI has already hiked its key policy rates eight times since March 2010 to suck in excess liquidity from the system and tame demand.
"Pace of food inflation has been easing. However, given the seasonality, there could be some transient pressure on perishable food items," Yes Bank chief economist Shubhada Rao said.
She, however, cautioned against the sustaining headline inflation.
"As such we maintain our call on RBI rate hike (repo and reverse repo) by 25 basis points on May 3 and 50 basis point hike by December-end this year," Rao said.
For the week ended April 16, milk became dearer by 5.10 per cent.
Similarly, cereal prices went up by 4.49 per cent, while rice and wheat rose by 2.08 per cent and 0.48 per cent respectively.
However, pulses bucked the trend and witnessed a decline of 6.49 per cent in their wholesale prices. Overall, vegetable prices were down by 0.21 per cent and potatoes by 1.61 per cent.
ICRA economist Aditi Nayar echoed the views of Rao and Chakravarty.
"Food inflation is broadly expected to ease over the coming quarter.
"With the rise in inflation related to non-food manufactured products in March 2011 and the anticipated increase in the prices of some petroleum products, the RBI is expected to maintain its anti-inflationary stance and hike the repo and reverse repo rates by 25 basis points in the upcoming review of monetary policy," Nayar said.
During the week under review, prices of non-food articles were up by 26.48 per cent year-on-year. Fuel and power became dearer by 13.53 per cent, while petrol was up 21.81 per cent.
Core inflation, which does not takes into account rise in food prices, was reported at over 7 per cent in March.
Global crude prices have gone over USD 120 per barrel as supply from Libya, a major exporter and OPEC member, has been disrupted due to civil war.
International banking and brooking giants had earlier predicted inflation in India to remain sticky.
While Citigroup said that headline inflation would average 7.5-8 per cent in 2011-12, Goldman Sachs had said the numbers would be 7.5 per cent.