Food inflation fell sharply to single digit at 9.01 pc for the week ended 12th Nov even as prices of most agricultural items, barring potatoes, onions and wheat, continued to rise, on an annual basis.

Food inflation, as measured by the Wholesale Price Index (WPI), was 10.63 percent in the previous week.

The rate of price rise in food items stood at 11.38 percent in the corresponding week of the previous year.

According to the data released by the government on Thursday, onions became cheaper by 32.85 percent year-on-year, while potato prices were down by 7.23 percent. Price of wheat also fell by 3.09 percent.

However, all other food items became expensive on an annual basis during the week under review.

Vegetables became 17.66 percent costlier, while pulses grew dearer by 14.28 percent, milk by 10.46 percent and eggs, meat and fish by 11.98 percent.

Fruits also became 4.59 percent more expensive on an annual basis, while cereal prices were up 2.86 percent.

Inflation in the overall primary articles category stood at 9.08 per cent during the week ended 12th November, as against 10.39 percent in the previous week. Primary articles have over 20 percent weight in the wholesale price index.

Inflation in non-food articles, including fibres, oilseeds and minerals, was recorded at 4.05 percent during the week under review, as against 5.33 percent in the week ended 5th November.

Fuel and power inflation stood at 15.49 percent during the week ended 12th November the same as in the previous week.

The decline in the rate of rise in food prices is likely to bring some relief to the government and the Reserve Bank, which have been facing flak from all quarters for persisting high prices.

The government had said steps were being taken to remove supply bottlenecks and expected prices to ease from December.

On Wednesday, Finance Minister Pranab Mukherjee had said that the government’s immediate priority is to contain price rise.

“High inflation and also some of the effort to control liquidity has a detrimental effect on short-run growth. The immediate priority is to control inflation so that long-term growth prospects are not affected,” Mukherjee had said in a written reply in Rajya Sabha on Wednesday.

Earlier this week, he had said in Parliament that inflation is likely to moderate to around 6-7 percent by March 2012.

Headline inflation, which also factors in manufactured items, has been above the 9 percent-mark since December, 2010. It stood at 9.73 percent in October this year.

The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation.

In its second quarterly review of the monetary policy last month, the central bank had said it expected inflation to remain elevated till December on account of the demand-supply mismatch, before moderating to 7 percent by March, 2012.

Sensex extend losses, down 55 points in opening trade

The BSE benchmark Sensex extended losses and fell by nearly 55 points in opening trade on Thursday to hit a two-year low of 15,645.22, as funds and retail investors offloaded their positions in the absence of any positive cue.

A weakening trend on other Asian bourses in line with overnight losses at the US market, also impacted the trading sentiment.

The 30-share BSE Sensex fell by 54.75 points, or 0.35 percent, to trade at a fresh two-year low of 15,645.22.

Similarly, the wide-based National Stock Exchange Nifty index declined by 11.30 points, or 0.24 percent, to trade at 4,695.15.

Brokers said the market sentiment remained distinctly bearish as funds and retail investors engaged in offloading stocks on concerns over high inflation, slowing growth and a depreciating rupee.

In addition, a weakening trend on the global markets on worries over slow growth also dampened the trading sentiment here.

In the Asia region, Hong Kong’s Hang Seng index was trading 0.79 percent lower, while Japan’s Nikkei shed 1.51 percent in morning trade on Thursday.

The US Dow Jones Industrial Average lost 2.05 percent in Wednesday’s trade.