Food inflation sticky, heatwaves to keep vegetable prices high

financialexpress.com:

Retail food inflation remained flat at 8.69% on year in May 2024 compared with 8.7% in April as the prices of vegetables, pulses and cereals continued to be elevated.

However the consumer food price index (CFPI) recorded a sequential decline of 0.73% in May. In May 2023, the food inflation was 4.31% y-o-y.

Deflation in edible oils continued in May, 2024. Inflation in vegetables was 27.33% in May compared to 27.8% in April.

The rise in retail prices of potatoes last month was 55.43% against an increase of 53% y-o-y in April due to prospects of a drop in output. Potato prices were in the negative zone during February 2023 to January 2024.

Retail inflation in onions rose 36.71% last month, marginally lower than the 36.58% rise on year in April. Tomato prices rose by 40.96% last month against a 41.95% rise in April.

Madan Sabnavis, chief economist, Bank of Baroda said “the present heatwave has taken a toll on vegetable supplies with prices of potatoes, tomatoes and onions rising which will continue for another month or two,”.

According to the agriculture ministry, output of potato and onion in 2023-24 crop year (July-June) is projected at 56.76 million tonne (MT) and 21.23 MT, a decrease of 6% and 20% respectively.

Inflation in pulses and products category rose to 17.14% last month on year against 16.84% in April, while the arhar variety of pulses reported the highest price rise of 32.1%. The price rise in lentils or masur variety of pulses was in the negative zone in April due to higher imports.

Overall cereal inflation in May rose to 8.69% from 8.63% in April on year – driven by the rise in rice prices.

Inflation in wheat rose 6.53% last month while price rise was 6.02% in April. Retail rice prices rose 12.28% last month,