India's food price inflation drops to an 18-month low of 8.60 per cent

India's wholesale price-based inflation rate dipped below the two-digit figure for the first time in 18 months, hitting a low of 8.60 per cent, as food prices in the country continued to decline for the seventh consecutive week.

The WPI inflation rate stood at 8.60 per cent (provisional) during the week ended 20 November 2010 against 10.15 per cent (provisional) in the previous week. This is first time that food inflation stood at a single digit level since the week ended 24 July, when it was 9.53 per cent.

The decline in food inflation, although coming in the wake of record flows of new crop grains, is being seen more as structural than cyclic.

"We have come to the conclusion that there is a structural driver to food inflation. In this case, the apt approach is to address the supply side," Reserve Bank of India deputy governor Subir Gokarn said at a conference on inclusive development yesterday.

Food price inflation stood at 18.71 per cent during the corresponding period of the previous year.

Build-up of food price inflation so far during the financial year, beginning 1 April 2010, was 9.79 per cent against 22.48 per cent in the similar period of the previous year.