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Government Fails to Control Food Inflation – Touches 17.4%

January 28, 2010

Domestic equity markets turned negative in the late afternoon session tracking rise in food price inflation to 17.40% for the week ended January 16 from 16.81% the week before.

Surge in the food inflation has once again raised apprehensions of stricter measures from the central bank in its policy review [Our opinion, the RBI is lacking the will for strict measures and is un-necessarily taking directions from the South Block].

The government released the wholesale price index (WPI) in respect of primary articles and the fuel group on Thursday. The primary articles Index, which has a weight of 22.02% in the overall WPI, increased by 0.32% to 285.5 from 284.6 in the previous week. As a result, the annual rate of inflation for primarily articles, calculated on point to point basis, increased to 14.66% as compared to 13.93% for the previous week and 10.96% during the corresponding week of the previous year.

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