Done with low inflation? Prices of food items rise 20%

KOLKATA & NEW DELHI: Prices of several food items have increased by up to 20% in the last one month and are expected to stay firm till new crops arrive in October-November in what some experts see as a signal to the end of low inflation.
Wholesale prices of cereals, pulses, tea, fish and chicken have gone up 8%-20% in the last one month. This is likely to impact retail prices, pinching the pockets of consumers.

Prices of food articles, which have a 14% weight in the wholesale price index, rose 4.23% in April even as the WPI-based index turned positive after 17 months, rising 0.34% year-on-year in April against -0.85% in March. Economists and experts feel food inflation will continue in the coming months unless the government takes corrective measures, and may mark an end to days of low inflation.

“It’s not only food inflation which is rising but others too, with crude prices recovering,” said Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices. Prerana Desai, vice-president at Edelweiss Agri Research, feels that food inflation will continue to remain till the new crop in October-November arrives. “Two consecutive drought years have led to tightness of the commodity market.

A well-spread good monsoon will ease the situation,” she said. Desai feels the government should reduce import duty of wheat and sugar which can lead to correction in food inflation.

Wheat arrival remains slow across Madhya Pradesh, Uttar Pradesh and Rajasthan and, according to experts, production should be lesser than government targets. “The market feels wheat in India is 88 million tonne while government in its third advance estimate of food grain production says wheat output at over 94 million tonnes for the year,” Gulati said.

Prevesh, a wheat trader at the Indore mandi in Madhya Pradesh, said wholesale wheat prices have increased 10% in the past one month to an average of Rs 1,700 per quintal. Prices can further rise by Rs 200-300 per quintal in the coming month if import duty is not relaxed, he added. Basmati rice prices have surged 12.72% in one month as exports have improved.

In the year ended March, India exported 40 lakh tonnes of basmati against 37 lakh tonnes in FY15. Rice wholesalers in Burdwan district of West Bengal, however, say prices have dropped in the last one week by almost 5% as exports to Bangladesh has dried up. “The neighbouring country has increased import duty on rice to 20% which has impacted exports from Bengal. This has pushed down prices.

We are now trying to export rice to Africa,” said Gautam Dutta, a rice wholesaler in Burdwan.