Proposed headline for May Retail inflation fell to a 12-month low of 4.75%, but food price increases continued unabated last month, providing little reason for optimism. The Consumer Food Price Index remained unchanged at 8.69%, with urban consumers experiencing a three-month high of 8.83% year-on-year change in food prices in India’s cities and towns. Vegetables and pulses played a significant role in this trend. Vegetable imports were above 27% for the sixth consecutive month, reaching a six-month high of 3.22%.
Prices for tomatoes, onions, and potatoes increased sequentially by 1.5%, 0.5%, and 15.1%, respectively. The future for vegetable inflation is not promising, with June’s retail pricing trends and growing wholesale costs indicating further financial strain for consumers.
According to data from the Department of Consumer Affairs Price Monitoring Division, the average retail price of tomato, onion, and potato in India increased by 21%, 14%, and 8% month-on-month, respectively, and by 35%, 58%, and 44% compared to the same period last year.
Wholesale prices for tomato, onion, and potato increased at alarming rates (28%, 18%, and 9%, respectively), highlighting the difficulties policymakers confront in controlling prices through trade policies.
Last month, cereals and products saw a five-month high of 8.69% in price increases, indicating food inflation. Rice was 13% more expensive than on June 14, 2023, wheat was 5.7% more expensive, and wheat flour (atta) inflation was 4.7%, indicating that price pressures are unlikely to subside for the time being.
Pulses’ inflation rate increased to 17.1% following a little slowdown in April, with a six-month high sequential price rise of 1.53%. On June 14, official prices for gramme dal, tur, urad, and moong increased by 17%, 27%, 13%, and 8.5%, respectively, compared to the previous year. The India Meteorological Department’s rainfall data as of June 14 shows a 12% deficit since June 1, raising moderate concerns despite a ‘above normal’ monsoon projection. Policymakers must be vigilant as food insecurity disproportionately affects the poor.
ABHISHEK VERMA
