Food inflation at 4-month low but rate hike still looms.

The Reserve Bank of India can hike rates for the second time in as many months in April to restrain the impact of high food and fuel prices from spilling over to non-food items, despite food inflation plunging to 16.22% for the week ended 13th March, the lowest in four month.

In the week ending 15th November, 2009, as per the provisional figures, food inflation had dropped lower to 16%. The reason for the declination of the index was the slow hike in prices of potatoes other vegetables such as onions became cheaper.

The week saw the petrol prices hiking 16.82% and on the other hand, even diesel prices got expensive by 14.99% year-on-year, since customs on crude were restored by the government, which also raised excise duty on petrol and diesel.

The government expects food inflation to fall after the arrival of the winter crop in markets next month. The price of some vegetables has witnessed a fall in recent weeks.

Source : ET