Retail food inflation eased sharply to 3.84% in April from 4.79% in the previous month and 8.31% in the year-ago month, thanks mainly to the fall in prices of two product categories with the most weight in the relevant index: cereals and milk. Prices of both, however, were still elevated.
Prices of edible oils and meat products also fell, while those of vegetables remained in the deep negative territory.
Food inflation in April was the lowest since November 2021, when it was 1.87%. Inflation in the ‘food and beverage’ category declined to 4.22% in April from 5.11% in the previous month.
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However, prices of milk and milk products may continue to be elevated till the start of winter months, given the decline in domestic production. In the coming months, the waning of favourable base too would exert an upward pressure on overall retail well as food inflation.
The performance of monsoon will be crucial for kharif output, which if robust could cool prices of grains, pulses and oilseeds.
Wheat prices rose by 15.46% in April, against 19.91% in the previous month. The decline was because of improvement in supplies because of fresh harvest arriving in the market while the Food Corporation of India and state agencies stepped up purchases from farmers at minimum support price.
Rice prices rose by 11.37% in April, a marginal decline from 11.51% in the previous month. Rice production in the 2022-23 crop year (July-June) is estimated at a record 130.8 million tonne (MT), which is 1.36 MT higher than the previous crop year.
While the inflation in ‘spices’ was 17.43% in April, jeera (cumin seeds) and banana prices rose sharply by 45.28% and 16.7% respectively. Global and domestic supply constraints have pushed up jeera prices sharply since the beginning of the year. Milk prices rose by 8.24%.
Because of robust production prospects, inflation in vegetables in April declined 6.05%. Inflation in potato (-15.52%), onion (- 15.92%), tomato (- 15.96%) and brinjal (- 4.75%) fell sharply.
The estimated production of onion during the 2022-23 crop year (July-June) is around 31.8 MT against 31.7 MT reported in the previous year. The output of kitchen bulbs was 26.64 MT in 2020-21.
Although potato output in the 2021-22 crop year (July-June) had declined to 53.6 MT from a record output of 56.1 MT in 2020-21, there is a prospect of a record harvest in the current crop year (2022-23).
Tomato prices fell last month as supplies have improved from the key producing states of Madhya Pradesh, Andhra Pradesh and Karnataka.
Inflation in oil and fats categories declined by 12.33% last month. For mustard oil, prices declined 17.29%. Inflation in refined oil (sunflower, soybean and palm) also declined 18.79% on year because of a decline in global prices of edible oil and bumper domestic output.
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Recently, the food ministry had urged edible oil retailers to cut prices further keeping in consideration the softening of global prices and bumper mustard output this season.
India imports about 56% of its total annual edible oil consumption of around 24 to 25 MT. Chicken prices declined 9.07% in April, while the overall food inflation in the meat and fish category declined by 1.23%.
