On account of rising prices of onions and petrol, food inflation in India is increasing at a faster rate. Onion and petrol prices were high by 6.5% and 4.5% respectively. Since December 25, food inflation rises to its highest level.
As per government data revealed on Thursday, India’s food price index rose 17.05% and the fuel price index shot up 11.61% in the year to January 22. While the annual food and fuel inflation stood at 15.57% and 10.87% a week before.
In late December inflation has reached a one year high of above 18% with 8.43% contribution alone in December.
Previously, Reserve bank of India had set the March inflation rate at 5.5% but now as the headline inflation reaches its highest level, they are prompted to revise from 5.5% to 7%.
There were rains in the prominent growing states of onions in October –November, the harvesting season of the crop which has resulted in spoilage of onions. Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu are the few key growing states of onions. Due to rainfall other food crops such as potatoes and tomatoes also suffered.
Therefore, the Indian central bank has raise rates seven times since March to tame inflationary expectations.