Tomato prices may be cooling from recent highs, but pulses could play the next spoilsport in the battle against inflation, with a below-par monsoon in August dragging down the sown area for pulses in the Kharif season by almost 10% from a year ago.
While a 37% surge in vegetable prices had fired up retail inflation to a 15-month high of 7.4% in July, prices of pulses have also risen sharply in recent months, speeding to 13.3% in July from 10.6% in June.
Economists reckon prices of pulses like tur dal and moong dal, that surged 34.1% and 9.1% respectively in July, would likely spiral further. This is because the total sown area for dals — 114.9 lakh hectares as on August 18 — is unlikely to improve much amid deficient rainfall towards the end of the sowing season.
Sown area for cereals and rice, that were lagging behind last year’s levels till a few weeks ago, have now inched up to grow 1.6% and 4.3%, respectively, and could help moderate their price rise in coming months. However, pulses sowing has not staged such a recovery and has, in fact, got worse over the past week.
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“Acreage of pulses is now 9.2% below last year’s levels, compared to -7.9% in the previous week [August 11], on the back of lower sowing of both urad (-6.4%) and tur (-15.3%). With sowing season about to end, pulses sowing is expected to be largely lower,” said Jahnavi Prabhakar, economist at Bank of Baroda, stressing that the impact of this drop may feed into inflation trends.
“Prices for pulses, especially tur have risen by 18-20% since the beginning of this financial year. This, coupled with sizeable downside in area sown for the Kharif crop, is already fuelling expectations of further price escalation in the coming months,” QuantEco Research economists said in a report.
The report, authored by Shubhada Rao, Vivek Kumar and Yuvika Singhal, noted that volatile vegetable prices may offer relief beyond August, but persistence of price pressures especially for cereals and pulses need to be closely watched. Among cereals, jowar sowing remains 7.3% lower than a year ago, but bajra and maize are marginally higher than last year.
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As of August 18, the southwest monsoon has been 6% below its long period average (LPA) with some States, including UP, Bihar, Jharkhand and Kerala, still seeing deficient rains. Worryingly, the country’s reservoir levels are also lower, at 62% of total capacity as on August 17, 2023, compared with 76% for the last season.
“With the exception of North Western region [8% above LPA], all the other regions continue to receive deficient rainfall, including Central region [3% below LPA], Southern peninsula [13% below LPA] and East and Northeastern region [20% below LPA],” Ms. Prabhakar pointed out.
Reservoir levels are significantly lower in the Western region, at 68% of capacity compared to 84% last year, Eastern region (38% of capacity against 52% last year) and the Southern region (53% of capacity against 87% of capacity last year.)
While pulses inflation hardened in July, other protein sources such as milk (8.6%) and meat and fish also reported higher inflation last month. Eggs inflation, however, eased from 7.5% in June to 3.8% in July.
The government has initiated imports of tomatoes from Nepal this month to cool runaway domestic prices and imposed a 40% export levy on onions last Saturday. In June, stock limits were imposed on importers, millers, and traders of tur dal, and the Consumer Affairs Ministry later announced plans to import 12 lakh tonnes of the dal this year, 35% over last year’s import tally. Urad dal imports from Myanmar are also planned.
