India’s Food Inflation 18.32% – Manmohan Should Go

According to the data released by the ministry of commerce and industry, India’s food price index rose 18.32% on annual basis during week-ended Dec 25, substantially faster compared with 14.14% in the week-ended Dec 11. The pace of rising food prices now is once again close to year-ago levels of around 20%. On a sequential or week-on-week basis, the index for food goods rose by whooping by 2.50 % to 192.5 from 187.8 for the previous week due to higher prices of fruits and vegetables (7%) and milk and egg (2%). This was sixth consecutive week of rise in index, suggesting prices were continuing to rise despite expected increase in supply of farm commodities.

Food inflation in the country is again on the rise after having declined to single digits by end of November and has increased very rapidly over the last several weeks. Further, the hike is not only due to surge in prices of one or two commodities like onions as the inflation in broader primary goods segment is also increasing equally rapidly. The development will put a lot of pressure on the central bank to tighten monetary policy further.

The index for ‘Fuel & Power’ with a weight of 14.91% in overall WPI on the other hand remained unchanged at its previous week’s level of 150.70. The annual rate of inflation for this group too remained unchanged at 11.63%. However, the fuel inflation is still high in an absolute sense and the government is understood to have deferred a hike in diesel prices for now to help keep fuel inflation from rising further.

The latest hike in food inflation is rather sharp and has challenged the expectations that food prices will soften with a bumper Kharif crop. It will increase the pressure on the Reserve Bank of India (RBI), which had left benchmark policy rates unchanged in the last review, to step down from its self imposed moratorium in November review and tighten the stance of monetary policy further in the forthcoming policy review scheduled for January 25.

Dr Manmohan Singh, the weakest Prime Minister in the History of India should submit his resignation as he is unable to do anything in this regard and should pave way for some Good Leaders rather than being a puppet in the hands of Italian Economic Mafia.