RBS:: India Strategy Vegetable prices back to "normal"

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India Strategy 
Vegetable prices back to "normal" 
The recent decline in prices has brought vegetable prices back to mid 2010
levels; the vegetable price spike seems to have run its course.
! Year over year primary food inflation ticked up to 11.5% for the week of 12 February 2011,
from 11.1% in the prior week according to Wholesale Price Index (WPI) data released earlier
today. The slight tick up on a yoy basis is due to the base effect, as the primary food articles
index declined 27bp from the prior week.
! Vegetable prices declined 11.6% wow, and are now back to levels seen in the middle of 2010,
with onion prices also back to October 2010 levels (refer to Chart). The vegetable price spike
seems to have run its course for now. To review, the spike in vegetable prices caused the tick
up in the headline yoy WPI inflation to 8.4% in December 2010 from November's level of
8.1%.
! Overall WPI primary articles inflation was 15.8% for the week of 12 February 2011, up from
14.6% the prior week. Recorded rates of yoy inflation for the other components for the week
were as follows: non-food articles at 31.6% and minerals at 17.1%. Meanwhile, fuel and
power inflation came in at 12.1%, up slightly from 11.9% in the prior week.