Despite back-to-back two years of weak monsoon rains, overall food price inflation in India has remained benign, and concentrated in just two commodities — onions and pulses.
Latest official data show food inflation that was under three per cent in July and August climbed to 4.3 per cent in September, largely due to high prices of onions and pulses.
Even as the official data show that overall consumer price inflation inched up to 4.4 per cent in September from 3.7 per cent in August, Citi Group researchers found that the price-rise was largely concentrated in pulses and onions. When they excluded these two commodities from the consumer price index and recalculated retail inflation in September, it came out substantially lower at 2.9 per cent.
Although inflation in vegetables stands at zero per cent, it is higher than the (-) 6.4 per cent in August and (-) 7.9 per cent in July. Prices of pulses rose at a rate of nearly 30 per cent in September, substantially faster than the 25.8 per cent in the previous month.
The Government on Monday floated a fresh tender for import of 2,000 tonnes of tur dal to augment supplies. This is in addition to an earlier tender for 5,000 tonnes.
Benign food inflation in India is reflective of the improvements in the management of food economy, said a research note by HSBC Global. “Food prices in particular have had a miraculous run…Despite two successive droughts, they continue to remain benign, thanks to an intriguing web of spatial distribution of rains, soft global commodity prices and prudent government policy back home.”
The Union Finance Ministry said, in a statement it issued on Tuesday, that along with the latest data on industrial production, the retail inflation data points to the economy being towards steady improvement.
The year-on-year inflation increased to 4.4 per cent in September 2015 from 3.7 per cent in August 2015, however, it is low compared to 5.6 per cent in September 2014, the release said.
It also said that food inflation in September 2015 (3.9 per cent) is lower than in September 2014 (6.2 per cent).
Reserve Bank Governor Raghuram Rajan had on September 29, announcing the bi-monthly Monetary Policy Statement, said: “Despite the monsoon deficiency and its uneven spatial and temporal distribution, food inflation pressures have been contained by resolute actions by the government to manage supply.” The first advance estimates indicated that food grain production is expected to be higher than last year. This, said the Governor, reflects actions taken to contain the adverse effects of rain deficiency through timely advisories and regular monitoring of seed and fertiliser availability.
Further, he said that the subdued international food price inflation should continue to put downward pressure on the prices of sugar and edible oil, and food inflation more generally.
“It is important that pro-active supply-side management by the government be in place to head off any food price pressures should they materialise, especially in respect of onion and pulses.”
