Fri, 06 Jan 2012 08:26:13 GMT

Food inflation dips to -3.36 percent; RBI may cut rates

India's annual food inflation slipped into the negative for the first time in at least six years, official data showed Thursday as prices of vegetables, especially onions and potatoes, fell sharply, giving relief to people and policy makers.

Food inflation dips to -3.36 percent; RBI may cut rates

The sharp drop in food inflation and easing in overall inflationary pressure may prompt the Reserve Bank of India (RBI) to cut policy rates in its next monetary policy review later this month.

The annual food inflation fell to -3.36 percent for the week ended Dec 24, as compared to 0.42 percent in the previous week and 20.84 percent during the corresponding week of last year.

"There has been substantial improvement. Food inflation has turned negative for the first time in recent memory," Finance Minister Pranab Mukherjee told reporters, reacting on the weekly data.

Food inflation during the week under review was the lowest since April 2006.

After remaining near double-digit for almost two years, food inflation has dropped sharply in the last two months. It has dipped for the ninth consecutive week.

It came down to single-digit in the second week of November and has slid consistently since then. It was recorded at 10.63 percent for the week ended Nov 5.

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