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Food Inflation Slows for a Second Week as India's Monsoon Boosts Plantings
India’s food inflation slowed for a second week as monsoon rains enabled farmers to plant more rice, cotton and soybeans.
An index measuring wholesale prices of agricultural products compiled by the commerce ministry rose 9.67 percent in the week ended July 17 from a year earlier, according to a statement released in New Delhi today. It gained 12.47 percent the previous week.
Heavy showers over most parts of the country in recent days prompted Farm Minister Sharad Pawar yesterday to say that grain output this year would exceed last year’s. Opposition lawmakers disrupted parliament proceedings this week, criticizing Prime Minister Manmohan Singh for rising prices.
“Food inflation will decline for sure because of adequate rain,” Jay Shankar, the Mumbai-based chief economist at Religare Capital Markets Ltd., said before the report.
The June-September monsoon rains are the main source of irrigation in India.
Reserve Bank of India Governor Duvvuri Subbarao, who raised interest rates this week for the fourth time since mid-March, said rains will play a key role in the central bank’s efforts to slow the benchmark wholesale-price inflation to 6 percent by March from 10.55 percent now.
Subbarao raised the reverse repurchase rate by half a percentage point to 4.5 percent and the repurchase rate to 5.75 percent from 5.5 percent.
To contact the reporter on this story: Tushar Dhara in New Delhi at tdhara1@bloomberg.net
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