Rama Krishna Sangem
Delayed or dull monsoon rains have impacted agriculture across the country. If North India is hit by excessive rains, South is affected by scanty rainfall. Weather experts expect rains to be normal by August first week. Otherwise, there will be a direct impact on food grains prices, by 5 to 7 per cent, say the experts.
Average retail inflation in June 2023 rose by an annualised 4.81%, a three-month high, against an increase of 4.31% in May, led by runaway grocery and food prices, data released by the government on Wednesday showed. Food prices in June jumped 4.49%, compared to a 2.96% climb in the previous month, pushing up overall inflation numbers, as extreme weather, a delayed monsoon and torrential rains in major food-bowl states, disrupted supplies.
Consumer inflation cooled to 4.5% in May, falling to the lowest level in 25 months and coming within the central bank’s target range of 4% plus or minus 2% for the third straight month.
Consumers continued to fret about unprecedented high prices of tomato, a kitchen staple. Rates of the vegetable have climbed to ₹240-Rs260 a kg in major cities, including the national capital, on the back of heavy rains and lower output during the March-June period, mainly because of adverse weather.
Poor households are disproportionately affected by an increase in food prices as they tend to spend more on food items as a proportion of their overall monthly spending. “I have never seen such high vegetable prices. Chicken is cheaper than tomatoes,” said Pintu Singh, a daily-wager in east Delhi.
RBI is watching the price situation
Even after several anti-inflation policy measures aimed at cooling the prices of basic staples, cereal inflation stayed in double digits at 12.7% in June. Pulses, another widely consumed source of protein for most Indians, rose 10.53%. Overall, vegetable inflation declined by 0.93%.
However, higher tomato prices more than offset a cooling of prices of other vegetable. Tomato is a basic ingredient of most Indian dishes.
Vegetable prices witness a routine uptick during summers due to seasonality related factors. The current spell of high increase in prices of some specific kitchen staples is rather abnormal and mainly due to weather, said Sonal Varma, an economist with the investment advisory firm Nomura.
The Reserve Bank of India (RBI), in its June monetary policy statement, cut its inflation forecast from 5.2% to 5.1% but has said there could be upside risks to inflation from food prices if weather turns out to be unfavourable.