January 17, 2012

India's wholesale food prices up 0.74% on-year in December

India's government data showed Monday (Jan 16) the country's wholesale food prices increased 0.74% on-year in December, significantly slower than 8.54% increase recorded in November.

The index for food articles group declined by 3.1% for the previous month due to lower prices of fruits & vegetables (13%), condiments & spices (6%), black gram (5%), poultry chicken (3%), tea (2%) and sorghum, rice, split red gram, ragi and barley (1% each).

However, the prices of pork (8%), fish-marine (5%), corn (3%), millet, egg, beef and buffalo meat, mutton and red lentil (2% each) and gram, coffee, wheat and milk (1% each) moved up, it said.

The Reserve Bank of India (RBI) has hiked key policy rates by a cumulative 525 basis points in 13 tranches since March 2010 to tame inflation. Currently, the repo rate -- short term lending rate -- is at 8.5%, while the reverse repo -- short term borrowing rate -- is at 7.5%.

However, during its mid-quarterly monetary policy review on December 16, the RBI paused its rate hike cycle, keeping the rates unchanged, in view of rising crude oil prices, rupee depreciation and the country's growth having slowed down significantly.

The central bank had also said that further rate increases may not be warranted if the current trend of moderating inflation persisted.