Rising prices of essential commodities have invited concerns for the government. The inflation rate measured by point-to-point movement in the wholesale price index peaked to a 13-month high of 6.68% for the week ended March 15, 2008. For the previous week it was 5.92%. The rise in prices is a global phenomena too and some believe that the international situation has impacted the domestic situation, as the country's economy is being increasingly aligned to the global economy. Mismanagement in the supply-demand chain and the increase in broad money supply are the causes for inflation in prices, experts say. According to the report of the International Grain Council (IGC) of March 28, global grain and oilseed markets experienced another volatile month, with the exception of rice, prices showed no consistent trend.
Global financial turmoil often overrode supply fundamentals, leading to frequent and unpredictable price swings, which also affected other commodities. Continued strength in crude oil prices and further dollar weakness had an impact. Ocean freight rates initially strengthened further before moving down on reports of possible reduced industrial activity in China ahead of the Olympic Games.
Global wheat prices were above $440 a tonne on March 27, after peaking to over $520 a tonne. IGC forecasts that global grain output in 2008 would be 1,694 tonne, an increase of 32 million tonne.
World wheat production would be at 646 million tonne, an increase of 42 million tonne over the previous year, due to a 2.5% increase in area under cultivation. Global prices of maize were around $240 a tonne by March 27. IGC forecasts global maize output to decline by 20 million tonne to 748 million tonne, while barley output would increase 10% to 148 million tonne.
According to estimates, India has achieved record grain production of 219.32 million in 2007-08, including 94.08 million tonne rice, 74.81 million tonne wheat, 36.09 million tonne coarse cereals, and 14.34 million tonne pulses. Cotton output is estimated at 23.38 million bales of 170 kg each, an all-time record. Oilseeds output is estimated at 27.16 million tonne.
Experts believe that the market manipulation is the cause