India’s food inflation rate fell to the lowest level in one and a half years as monsoon rains raised crop output and moderated prices.
An index measuring wholesale prices of agricultural products including lentils, rice and vegetables compiled by the commerce ministry rose 8.6 percent in the week ended Nov. 20 from a year earlier, a report showed in New Delhi today. It gained 10.15 percent the previous week.
“The general trend of decline in food prices is because of good agricultural production due to adequate monsoons,” Dharmakirti Joshi, Mumbai-based chief economist at Crisil Ltd., the Indian unit of Standard & Poor’s, said before the report.
The country received the most rainfall in three years in the June to September monsoon season, helping spur farm production and cap gains in food prices. Reserve Bank of India Governor Duvvuri Subbarao, who raised interest rates on Nov. 2 for the sixth time this year, has said the central bank may refrain from boosting them for three months.
Today’s food inflation data is the first time the rate has fallen below 10 percent since May 2009.
The central bank predicts the benchmark wholesale-price inflation rate may slow to 5.5 percent by March 31 from 8.58 percent in October.
Still, India’s monetary policy is aimed at ensuring “that expectations are anchored,” Reserve Bank Deputy Governor Subir Gokarn said yesterday in New Delhi. “We do not want to allow the food pressures to translate into larger, wider inflationary pressures and as the economy is reaching its capacity limits, that risk is high. We need to act accordingly.”
Wheat output in India may exceed 82 million metric tons because of favorable weather, the state-owned Directorate of Wheat Research said yesterday.
The index reading for the week was 180.5 compared with 180.1 the week before.