Retail food inflation rose sharply to 9.36% on year in June 2024 compared to 8.69% in May as the prices of vegetables, pulses and cereals rose.
The consumer food price index (CFPI) rose by 3.16% sequentially in June. In June 2023, the food inflation was 4.55% y-o-y.
Deflation in edible oils continued in June, 2024. Inflation in vegetables rose to 29.32% in June compared to 27.33% in May. Inflation in onion and potato were at stratospheric 58.49% and 57.59% respectively in June on year because of lower production prospects
According to the agriculture ministry, output of potato and onion in the 2023-24 crop year (July-June) is projected at 56.76 million tonne (MT) at 21.23 MT, a decrease of 6% and 20% respectively.
Madan Sabnavis, chief economist, Bank of Baroda said higher food inflation was due to major contributions from vegetables, fruits, pulses and cereals. While these products would continue to witness high inflation, Sadnavis noted “the heatwave impact has been seen on vegetables,”.
Inflation in pulses and products category rose to 16.07% last month on year against 17.14% in May, while the arhar variety of pulses reported the highest price rise of 26.86.1%. The price rise in gram split and moong were 18.49% and 8.44% respectively last month on year.
Overall cereal inflation in June rose to 8.75% from 8.69% in May on year – driven by rise in rice and wheat prices.
Inflation in wheat rose 6.67% last month while prices rose 6.53% in May. Retail rice prices rose 12.15% last month, marginally lower from May.
The government has banned exports of white rice and imposed 20% export duties on par-boiled rice to improve domestic supplies. The government has already sold more than one MT of rice in the retail market through Bharat rice initiative at a subsidised rate of Rs 29/kg.
Aditi Nayar, chief economist, ICRA said that there has been a rebound in the food and beverages inflation to above 8.0%, amid a sharp sequential increase in vegetable price. “With nearly 50% of kharif sowing usually taking place in the month of July, adequate rainfall across regions will be critical over the next few weeks to accelerate the pace of sowing,” Nayar said.
At 37.87 million hectare or 35% of the normal sown area, the combined sown area of key crops – paddy, pulses, oilseeds, sugarcane and cotton – was up 14% on year a week ago. Inflation in the meat and fish category rose by 5.39% last month, while prices rose by 7.28% in May. Chicken prices rose by only 5.11% last month.
Mustard oil and refined oil prices dropped by 8.59% and 6.39% respectively last month on year while overall inflation in oils and fats category declined 2.68%.
Inflation in spices continues to ease at 2.06% in June from 4.27% in May. Jeera prices declined by 3.79% on year after 23 months.