New Delhi: Food inflation climbed to a four-and-half month high of 9.90 percent in the last week of July, increasing the burden on households on the back of costlier onions, fruits and protein-based items.

Experts said food inflation is expected to remain volatile, but added that trend in global commodity prices would determine the overall domestic price situation.

Food inflation, measured by Wholesale Price Index (WPI), went up to 9.90 percent for the week ended July 30 from 8.04 percent.

Prices of onions rose by 36.62 percent year-on-year, fruits (up 16.49 per cent), vegetables (14.61 percent) and eggs, meat and fish (13.44 percent).

In addition, cereal prices went up by 6.22 percent, potatoes by 10.85 percent and milk by 10.38 percent on an annual basis.
"Food inflation is likely to continue to display volatility, on account of perishable items, namely fruits and vegetables, and protein items, led by changing nutritional preferences in the face of an inadequate augmentation of supply," ICRA economist Aditi Nayar said.

This is the highest rate of price rise in food items since the week ended March 12, when food inflation stood at 10.05 percent. In mid-July, food inflation slipped to a 20-month low of 7.33 percent.

"While food inflation fluctuates, the real focus would be on headline inflation numbers. The global environment is uncertain and we have seen sharp fall in international commodity prices and if this continues the overall rate of price rise may moderate in the economy," Crisil chief economist D K Joshi said.

Headline inflation stood at 9.44 percent in June, mainly on account of rise in prices of manufactured items, which have over 65 percent share in the WPI basket.

Prices of commodities, including crude, have fallen sharply in the international markets during the past week ever since Standard & Poor's downgraded US' sovereign debt ratings, which led to meltdown in markets worldwide.

As per data released on Thursday by the government, primary articles recorded inflation of 12.22 percent for the week ended July 30, up from 10.99 percent in the previous week.

However, inflation in non-food articles, which include fibres, oil seeds and minerals, fell to 15.05 percent from 15.60 percent in the previous week.

Meanwhile, fuel and power inflation stood at 12.19 percent, marginally up from 12.12 percent in the week ended July 23.
Crude prices in international markets have fallen sharply this week. New York's main contract, light sweet crude for delivery in September, dipped to USD 82 per barrel in Asian markets on Thursday, from above USD 100 a week ago.

Both Crisil's Joshi and Deloitte's Chakravarty said that RBI will continue with its monetary tightening if inflationary pressure persists.

The RBI has already hiked interest rates 11 times since March 2010 to tame demand and curb inflation.

In its Economic Outlook for 2011-12 released earlier this month, the Prime Minister's Economic Advisory Council projected headline inflation to remain high at around 9 percent till October.

Earlier this week, the government informed the Parliament that demand-supply mismatches were responsible for the current inflationary situation in the country.

(Agencies)