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India's food price inflation fell in the week ended August 7, but stayed in double digits for the second consecutive week, official figures showed Thursday.
The annual food price index was 10.35%, but slower than the 11.40% recorded as on week ended July 31, the Ministry of Commerce and Industry said. It was also smaller than a 14.18% growth in the corresponding week of the previous year. Economists expect food price inflation to weaken further as monsoon brings higher crop production.
In the latest week, food price inflation eased mainly due to decreases in potato, vegetables and onion prices. But, a 45.69% rise in mineral prices offset the declines. Prices of non-food articles grew 21.70%.
Further, the ministry said the major primary articles group logged an inflation rate of 14.85%, an increase from 7.85% recorded last year. Moreover, fuel, power, light and lubricants prices increased to 12.57%, reversing a 9.88% fall a year ago. Non-food articles prices surged 21.7%.
On Monday, the ministry said India's annual inflation, based on the monthly wholesale price index, fell to single digits in July for the first time in six months. Wholesale prices rose at a slower annual pace of 9.97% in July compared with a 10.55% growth in the previous month.
The second fastest growing Asian economy has been struggling to maintain price stability, forcing the central bank to raise its key interest rate for the fourth time this year. On July 27, the Reserve Bank of India raised its reverse repo rate by 50 basis points to 4.5% and the repo rate by 25 basis points to 5.75%.
Macroeconomic research consultancy Capital Economics said Monday that the central bank is likely to increase its key interest rates by a further 100 basis points over the next one year.
Inflationary pressures have exacerbated and become generalized, with demand-side pressures clearly evident, the central bank had said. However, it expects the wholesale price inflation to ease to 6% by the end of this fiscal year.
Curbing inflation is one among the Indian government's top priorities. "We are making every possible effort to tackle this problem. I am also confident that we will succeed in these efforts," the country's Prime Minister Manmohan Singh said on Sunday, addressing the nation on the 63rd anniversary of independence.
The nation's Planning Commission Deputy Chairman Montek Singh Ahluwalia last week said the Indian economy would grow 8.5% despite a 13-month low industrial output growth of 7.1% in June. The RBI and the Prime Minister's Economic Advisory Council projected a economic growth rate of 8.5% for the current fiscal.
In the March quarter, the Indian economy expanded 8.6% compared to the same period a year ago following a revised 6.5% expansion in the final three months of 2009. Official GDP figures for the April to June period is due on August 31.
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