After food inflation hit a three-year high in August, the government is examining reasons behind the “undue” rise in grain prices despite bumper production for a third straight year through June.
"Prices of grain have been rising despite good production and storage in the last few years. We are analysing that. We will find out the reasons behind the undue inflation in foodgrain," food minister KV Thomas said on Wednesday.
The average rise in prices of rice and wheat has been 19.45% and 12.17%, respectively, this fiscal, much higher than the average headline inflation of 5.28%, showed official data. This is despite their production having hit 579.89 million tonne in the three years through June 2013, the highest for any three-year period. Moreover, although the government has raised the benchmark prices for paddy and wheat by roughly 5% each, inflation in the two key crops has been much higher in recent months.
Wholesale food inflation surged to 18.18% in August compared with the headline inflation of 6.10% for the month. Although onion and other vegetables mainly drove food inflation in August, a sharp 20.13% rise in rice prices also aided the upward movement of the wholesale price index.
The country's summer grain output is expected to rise marginally in the current crop year through June 2014 despite a slight drop in rice production, according to the first advance estimate. Considering the first advance estimate is usually the most conservative of the five the agriculture ministry comes up with every year, government officials say the country is well on course to reaping a good summer harvest for a fourth straight year.
The output of summer-sown grain crops is expected to hit 129.32 million tonne in 2013-14, compared with 128.20 million tonne a year earlier, agriculture commissioner JS Sandhu said on Tuesday.