<p>The annual rate of price rise of food items in the previous week ending June 5 was 16.12 per cent.Year-on-year, pulses turned dearer by 34.14 per cent, while milk cost 21.12 per cent more. However, prices of potato and onion were down by 37 per cent and 22 per cent, respectively.<br /><br />Food inflation has pushed core inflation into double digits (provisionally 10.16 per cent in May), prompting speculation that the Reserve Bank would tighten monetary policy to temper consumer spending.<br /><br />"Inflation rate has reached uncomfortable levels. Therefore, some action is called for. It is for the Reserve Bank to decide on the timing. But, some action is called for," PMEAC Chairman C Rangarajan had said earlier this week, setting of speculation action could come before the Bank's July 27 scheduled policy review.<br /><br />Finance Minister Pranab Mukherjee too had dropped broad hints that there could be policy action by RBI, saying: "So far as the monetary part is concerned, the Reserve Bank will look into it."<br /><br />However, economists indicated no such immediate action was warranted as the index was almost unchanged.<br /><br />"There is no trend ... anxiety is still there. Though there is change in the composition, index as a whole is at the same level," Chief Statistician of India Pronab Sen said.<br />Food inflation has been above the 16 per cent mark for nine straight weeks.<br />"Food inflation may start coming down post July ... I do not expect the Reserve Bank to take any monetary action before its July meeting," Crisil Principal Economist D K Joshi said.<br /><br />Mukherjee too had spoken about a good monsoon having a softening impact on inflation.<br />Monsoon accounts for 80 per cent of rains India receives, and 60 per cent of the area under cultivation is rain-fed. Last year, the country's crop production was hit owing to poor rains, leading to an upward spiral in food prices.<br /><br />On a weekly basis, vegetables prices rose by 8.06 per cent and price of condiments and spices by 3 per cent. Urad, moong and tea became expensive by 1 per cent each during the week.<br /><br />Initially food inflation rose due to sugar, followed by high prices of horticulture (fruits and vegetables), then pulses and then foodgrains, which came much later, Sen said.<br />"Price of pulses and sugar has moderated over the past several weeks but the easing of prices is still to happen in horticulture," said Sen, who avoided risking a forecast. <br />Though food inflation is expected to remain at the current level and the pressure on inflation is likely to be added with possible hike in fuel prices, economists do not expect any monetary action by RBI before its July 27 review.<br /><br />Joshi said the current liquidity crunch is a temporary problem, which going ahead will ease as the government starts spending the money collected through 3G spectrum auction.<br /><br />While Joshi expects RBI to increase its key policy rates by 25 basis points on July 27 to check inflation, he and Sen were of the view that where inflation is headed depended on the monsoons.<br /><br />The weather office has predicted near normal monsoon this year, although it has been slow to advance since hitting the Indian coast in late May.<br /></p>
<p>The annual rate of price rise of food items in the previous week ending June 5 was 16.12 per cent.Year-on-year, pulses turned dearer by 34.14 per cent, while milk cost 21.12 per cent more. However, prices of potato and onion were down by 37 per cent and 22 per cent, respectively.<br /><br />Food inflation has pushed core inflation into double digits (provisionally 10.16 per cent in May), prompting speculation that the Reserve Bank would tighten monetary policy to temper consumer spending.<br /><br />"Inflation rate has reached uncomfortable levels. Therefore, some action is called for. It is for the Reserve Bank to decide on the timing. But, some action is called for," PMEAC Chairman C Rangarajan had said earlier this week, setting of speculation action could come before the Bank's July 27 scheduled policy review.<br /><br />Finance Minister Pranab Mukherjee too had dropped broad hints that there could be policy action by RBI, saying: "So far as the monetary part is concerned, the Reserve Bank will look into it."<br /><br />However, economists indicated no such immediate action was warranted as the index was almost unchanged.<br /><br />"There is no trend ... anxiety is still there. Though there is change in the composition, index as a whole is at the same level," Chief Statistician of India Pronab Sen said.<br />Food inflation has been above the 16 per cent mark for nine straight weeks.<br />"Food inflation may start coming down post July ... I do not expect the Reserve Bank to take any monetary action before its July meeting," Crisil Principal Economist D K Joshi said.<br /><br />Mukherjee too had spoken about a good monsoon having a softening impact on inflation.<br />Monsoon accounts for 80 per cent of rains India receives, and 60 per cent of the area under cultivation is rain-fed. Last year, the country's crop production was hit owing to poor rains, leading to an upward spiral in food prices.<br /><br />On a weekly basis, vegetables prices rose by 8.06 per cent and price of condiments and spices by 3 per cent. Urad, moong and tea became expensive by 1 per cent each during the week.<br /><br />Initially food inflation rose due to sugar, followed by high prices of horticulture (fruits and vegetables), then pulses and then foodgrains, which came much later, Sen said.<br />"Price of pulses and sugar has moderated over the past several weeks but the easing of prices is still to happen in horticulture," said Sen, who avoided risking a forecast. <br />Though food inflation is expected to remain at the current level and the pressure on inflation is likely to be added with possible hike in fuel prices, economists do not expect any monetary action by RBI before its July 27 review.<br /><br />Joshi said the current liquidity crunch is a temporary problem, which going ahead will ease as the government starts spending the money collected through 3G spectrum auction.<br /><br />While Joshi expects RBI to increase its key policy rates by 25 basis points on July 27 to check inflation, he and Sen were of the view that where inflation is headed depended on the monsoons.<br /><br />The weather office has predicted near normal monsoon this year, although it has been slow to advance since hitting the Indian coast in late May.<br /></p>