India’s food inflation continues to be stubbornly high, vegetables and pulses prices soar
By Sapna Das
In April 2024, vegetable prices went up by 27%, a tad below the 28.3% inflation clocked in March, but it’s the fourth consecutive month when vegetable prices have grown over 27%.
Prices of pulses and other products went up over 16% in April, lower than the previous months but still very much on the higher side, prompting the government to take actions like scrapping import duty on chickpeas and extending duty-free imports of yellow peas.
Prices of cereals have continued to rise by over 8% in the last two months. While prices of meat and fish have grown steadily over the last 3 months, prices of eggs and spices have come off from their highs.
Vegetable, pulses and to some extent cereal price inflation has probably pushed food price inflation to over 8.7% in April, higher than even the February food price index which rose by 8.66%. While food & beverage prices rose 7.87% in April, higher than March’s 7.69% and 7.76% rise witnessed in February. Food & beverages comprise close to 46% of the retail inflation basket.
Madhavi Arora, Chief Economist, Emkay Global, said, “Considerable uncertainty prevails in the food price outlook. Despite healthy progress in Rabi production, uneven seasonality in vegetable prices together with increasing incidence of climate shocks warrant careful monitoring. The RBI cannot do much to influence food supply management, but this puts pressure to stay vigilant on domestic dynamics.”
This could also be impeding a sharper decline in headline retail inflation, with retail inflation for April registered an easing of 2 basis points over March. In the last MPC meeting, RBI Governor Shaktikanta Das indicated stubborn food inflation may be preventing a quicker easing of CPI inflation. The governor’s observations may have dimmed hopes of an early rate cut by the central bank.
Sanjeev Agrawal, President of PHD Chamber of Commerce & Industry, said, “In the recent months, inflation has come down significantly due to continuous softening in housing inflation from 3.2% in January 2024 to 2.6 in April 2024, fuel and light from -0.6% in January 2024 to -4.2 % in April 2024, clothing and footwear categories from 3.3% in January 2024 to 2.8% in April 2024 and pan, tobacco and intoxicants from 3.2% in January 2024 to 2.9% April 2024.
However, inflation is still sticky in food and beverages at 7.8 in April 2024. Going forward, the inflation trajectory is expected to become normal by September/October 2024 as many of the Kharif crops will be entering the mandis and supplementing the existing supply.”
Rajani Sinha, Chief Economist, CareEdge Ratings, said, “Reversing last month’s trend, food inflation inched up to 7.9% as the ongoing deflation in the oil and fat category fell to a single-digit after 12 months.
The high inflation in specific food categories, including vegetables and pulses, remains a concern. While the outlook for food inflation has brightened due to anticipations of a normal monsoon, the temporal and spatial distribution of monsoon would be critical factors.
Apart from elevated food inflation, the incremental risk to inflation stems from the uptick in global commodity prices, especially industrial metals. Industrial metal prices are up ~20% in the past three months. This warrants closer attention as the rise in input prices can be passed on to the consumption basket.”
This article has been republished from CNBCTV 18.