Food Inflation drops to stood at 7.70% in week ended 30 April 2011

by khalid on 12/05/2011 · 2 comments

The food inflation or food price index, calculated on a point to point basis, stood at 7.70% for the week ended 30th April, 20011 as compared to 8.53% for the previous week ended 23rd Apr2011. Similarly fuel price index too stood at 12.25% for the week ended 30th April, 20011 as compared to 13.53% for the previous week ended 23rd Apr2011.

The primary articles price index was up 11.96%, compared with an annual rise of 12.11% a week earlier. This drop in index occurred due to the action taken by RBI. The central regulatory bank (RBI) raised interest rates last week — its ninth rate hike since March 2010 — by a sharper-than-expected 50 basis points and said fighting inflation was its priority, even at the expense of short-term growth.

The wholesale price index-based inflation, the most widely watched gauge of prices in India, rose 8.98% in March 2011 from a year earlier, higher than February’s 8.31% rise.

The current inflation dynamics will have impact on growth rate which likely to slow down due to this RBI action. However, at present, we see a buildup in core inflation while food inflation is set to reduce.

Inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.

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