Retail food inflation declined to 4.19% in December from 4.67% in November, mostly driven by decline in prices of edible oils, meat products, pulses and vegetables.This is the lowest food inflation since January, 2022.
Inflation in the ‘food and beverage’ category also declined to 4.58% in December from 5.07% in November.
According to traders, the prices of fruits and vegetables have softened due to robust harvest in the winter months. However, a clutch of items like wheat, rice, milk, potato and bananas saw sharp price increases in October.
Inflation in cereals was 13.79% in December up from 12.96% in November, compared with 3.89% for pulses and (-) 15.08% for vegetables.
Wheat prices rose by 22.2% in December 2022. Wheat output in the 2021-22 crop year (July-June), as per the agriculture ministry, has declined by around 3% on year to 106.8 million tonne (MT) because of heat waves during the flowering stage of the crop in March last year. In May, 2022, India banned wheat exports for ensuring domestic supplies
Rice price rose by 10.49% in December while prices rose by 10.51% in the previous month. India’s rice production in the current kharif season for the 2022-23 crop year (July-June) is expected to decline by around 6% to 104.99 MT against 111.76 MT in 2021-22, according to the first advance estimate of foodgrain production released by the agriculture ministry recently.
The government also banned broken rice exports as well as put additional export duties of 20% on the certain varieties of non-basmati rice exports.
Inflation in potatoes rose to 10.05% in December while inflation in the previous month was 11.79%. Potato prices are likely to soften with the commencement of arrival of new crop in the market as well in cold storage, a farmer from Agra told FE. The country’s potato output in the 2021-22 crop year (July-June) has declined to 53.6 MT from a record output of 56.1 MT in 2020-21.
However, traders say that prospects of a new potato crop which would be harvested next year would be higher because of better area expansion because of higher price realisation this year. Onion price inflation was down 21.28% on year in December. Negative onion inflation last month was due to a bumper output of 31.12 MT in the 2021-22 crop year, against 26.64 MT in 2020-21.
Tomato prices fell by 49.67% in December, as supplies have improved from the key producing states of Madhya Pradesh, Andhra Pradesh and Karnataka. Milk inflation in December was at 8.23%.
The edible oil and fat category saw a marginal inflation at 0.53% in December 2022, mostly contributed by decline in domestic prices of edible oil since May. For mustard oil, prices declined by 8.6% in December 2022. Inflation in refined oil (sunflower, soybean and palm) was at 5.2% because of a decline in global prices of edible oil.
India imports about 58% of the total annual edible oil consumption of around 24 to 25 MT.
Chicken prices witnessed a moderate increase of 7.82% in December, 2022, while the overall food inflation in the meat and fish category was 5.13 %.