Food inflation declines, govt concerned over cartelisation

Decline in vegetable and cereals prices pulled down food inflation by more than one percentage point to 10.39% for week ended February 19 over the previous week, as a top government functionary called for steps to prevent cartelisation by traders.

Food inflation stood at 11.49% in the previous reporting week and 21.62% in the corresponding period a year ago.

While a government data released today showed decline in prices of onions, potatoes and pulses, rates of fruit, milk and vegetables as a group continued to remain high.

Prices of potatoes declined by 12.66% year-on- year, while pulses fell by 5.02% during the period. Onions and wheat fell by 3.64% and 2.06% respectively.

The items that became dearer during the week ended February 19 vis-a-vis the corresponding year-ago period were fruits (16.34%), egg, meat and fish (14.5%), vegetables (14.29%) and milk (11.07%).

"The current inflation in food is unacceptably high. We have to work towards bringing this down," Chief Economic Advisor Kaushik Basu said.
Basu stressed on using the provisions of the competition law to prevent cartelisation by traders to jack up prices of essential food items.

"There is a need to invoke anti-competition law," he said while calling for measures against cartelisation to bring down the prices.

The competition watchdog CCI is already probing the role of traders'' cartel in the sudden spike in onion prices in December last year.

Experts said though declining prices of certain food items will have a favourable impact on headline inflation in February, yet fuel prices will be something that needs to be watched.

"Inflation, not just food inflation, is an immediate challenge the country is facing... We have to see how fuel prices become volatile and how it impacts our import bill," ICICI Bank Managing Director Chanda Kochchar said.

Inflation declined marginally to 8.23% in January from 8.43% in the previous month, as prices of certain commodities like wheat, pulses and sugar eased.

Commenting on the food inflation figures released today, Crisil''s chief economist D K Joshi, said "that was expected.

This is an indication of a downward slide in inflation. We could soon see it in single digits." .