Little respite: on the rise in food prices

The retail inflation data for April was misleading. The Consumer Price Index (CPI)-based preliminary headline shows that annual sales price increases, across the broad spectrum of goods and services that make up the CPI, have slowed fractionally to an 11-month low of 4.83%, from The 4.85% of March. However, this slowdown did little to mask the more worrying acceleration in food price increases. Consumer Food Price Index (CFPI) inflation accelerated 18 basis points from the previous month’s year-on-year pace to a four-month high of 8.7%, with the month-on-month -monthly interest rate accelerated to 0.74%, from 0.16% in March. Rural consumers fared worse than their urban counterparts, with both food and broader inflation reflecting faster price increases. The CPI-based value for the hinterland was still well above the 5% limit at 5.43%, while inflation in urban areas was sharply lower at 4.11%. The rural economy was hit by a weak monsoon last year and sweltering temperatures this summer. The 8.75% increase in food prices for rural consumers, more than 19 basis points faster than the 8.56% experienced by urban consumers, is all the more worrying because food is an essential expense where every household has the resources have to find for.

Pressure on food prices remains high, with grains – the heaviest weight in the food category – witnessing a 26 basis point rise in inflation to 8.63%. Data from the Price Monitoring Department of the Ministry of Consumer Affairs shows that the average price of rice on May 14 was 14.3% higher than on May 14, 2023. And the price of wheat was 6.4% higher than a year earlier, which points to a postponement on May 14, 2023. the grain front is unlikely in the short term. Rising temperatures in April also kept inflation in vegetables, which are particularly vulnerable as perishable products, at double digits for the sixth month in a row at 27.8%. Price hikes for pulses also provided little relief as they extended their stay by double digits to an eleventh month. And the Consumer Affairs Department data shows that prices of all five major dals – gram, tur, urad, moong and masoor – continued to rise significantly, as on May 14. While water storage in the country’s 150 reservoirs decreased to 27% of capacity. on May 9, and significantly lower than the average levels of a year earlier and a decade ago, the outlook for price stability is almost entirely dependent on the forecast ‘normal monsoon’, which will deliver spatially and temporally well distributed rainfall in the coming months .