Food, fuel prices pull inflation down to 12.4%

New Delhi: Lower prices of food and fuel items pulled down inflation to 12.4%, offering hopes of what the finance ministry described as "early signs of moderation'' in prices.
    The decline in the rate of price rise by 0.23% from 12.63% in the previous week comes after five weeks of consistent rise.
    "There are some early signs of moderation of inflation,'' the finance ministry said in a statement adding in the primary articles group 21 out of total 98 articles have shown decline in prices and there was no increase in prices of another 48 articles.
    However, according to analysts, the decline could be temporary as crop production could be hit due to flood in many states and implementation of sixth pay commission from next month would result in creation of more demands.
    Inflation, which still remains much higher than targeted 9%, for the fiscal could prompt RBI to further tighten monetary policy during the half-yearly review of the credit policy in October.
    According to the ministry statement, prices of 30 essential commodities, after remaining range bound between 5.7-6.7% for 19 weeks in the current financial year, increased from 6.74% as on the August 9 to 7.24% during the reporting week. During the week, prices vegetables declined by 1.1% while meat, egg and fish became cheaper by 0.2%.
    Besides, falling crude in the international market cooled down prices of industrial fuels like naphtha by 9% and furnace oil by 6%. "It (fall in inflation) reflects the global crude price trend. Prices of naphtha, furnace oil light diesel oil etc have come down and certainly this is a welcome pause,'' Crisil principal economist D K Joshi said.
    But agri commodities are still putting a pressure on inflation, he said, adding, "It is too early to conclude that the inflation has started coming down. This fall does not certainly mean that a declining trend has started start.''
    However, in case of manufactured products rate of inflation in the current week increased to 11.02%. AGENCIES

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Expect onion prices to climb in coming months

Delayed Monsoon, Lower Minimum Export Prices Likely To Keep Prices High

ONION prices are expected to rise by Rs 2-4 per kg in the coming months owing to poor supply, delayed monsoon and decreased minimum export price (MEP) Tamil Nadu Agricultural University has said.
    A survey by the university has advised farmers to store small onion and sell them during October-November as its prices are expected to rise in the coming months. Delayed monsoon, decreased MEP and reduced arrivals from Karnataka would support the prices to rule on the higher side in Tamil Nadu according to the survey carried out by Domestic and Export Market Intelligence Cell (Demic) of Tamil Nadu Agricultural University. If there is rainfall in Palladam, Tirupur and Perambalur and erode areas in Tamil Nadu during harvest, the farmers prices would increase beyond Rs 15 per kg, it said.
    Arrivals from Karnataka have come to an end this year in early August itself and currently farmers were getting a price of around Rs 6 to Rs 11 per kg depending on quality. According to the study for the next three months the prices would hover around Rs 8 to Rs 15 per kg. The country produced around 74.51 lakh tonne of onion from 5.28 lakh hectare in 2007-08 which was 11% higher than that of the previous year according to the estimates of the National Horticulture Research and Development Foundation.
    Exports stood at about 11 lakh tonne during the period which was 5% less than that of 2006-07 due to the government restrictions on export like increasing MEP and quantity restrictions.
    Both production and export consisted of Bellary onion as well as small onions. Bellary onion produced in Maharashtra, Gujarat, Karnataka and Tamil Nadu were exported to Malaysia, Singapore, Seychelles, Bangladesh and the Middle East countries.
    Small onions grown mostly in the southern states and also known as rose onion and Krishnapuram onion were grown in Kolar district in Karnataka and Cuddapah district in Andhra Pradesh. Multiplier onion known as podisu and shallots were grown in Tamil Nadu, Puducherry and Andhra Pradesh.
    Small onion produced in Karnataka and Andhra Pradesh were exported from Chennai port to Singapore and Malaysia and multiplier onions to Singapore, Malaysia and Sri Lanka. MEP ranged from $360 per tonne of podisu onion to $520 a tonne for Bangalore rose onion. The prices of small onion this month have increased by about 20%.