vIndianz.com (24 Dec, 2009) — Food inflation eased a little at 18.65% in the second week of December, raising expectations of some respite from towering prices in the months ahead, even though rates of necessary items like potatoes and pulses remained excessively high for comfort.
The wholesale-price based index of food articles dropped by 1.30% for the week ended December 12 from 19.95% a week ago.
Potato prices have risen more than 115% since last year whilst that of pulses has shot up by close to 42%. However, analysts say the months ahead are expected to witness food prices, which had shot up to a 10-year high last week, alleviate a little more.
“Prices are likely to stabilize. I expect food inflation to go down in January partially due to seasonal effect,” said HDFC Bank chief economist Abheek Barua.
Planning Commission deputy chairman Montek Singh Ahluwalia had said yesterday that the price circumstances would cool down in the upcoming months.
“The price built-up is on assumption post drought. Stocks of cereals are sufficient, and prices can be moderated; and it will be from January,” Ahluwalia said.
The Reserve Bank, though, regardless of small moderation in food prices, might still go ahead with a 50-basis point hike in Cash Reserve Ration (CRR), the money banks keep with the central bank, to tame inflationary expectations, Barua said.
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