RBI is caught between tomatoes and cookies

economictimes.indiatimes.com:

India are sending confusing signals — cookies are becoming more affordable, but meals are turning more expensive. While the former may be a more permanent indicator of commodity inflation, could the central bank really afford to ignore the latter as transient? The cost of a home-cooked vegetarian lunch or dinner in the world’s most-populous nation jumped by 28% in just one month, largely because of tomatoes. In New Delhi’s Azadpur, one of Asia’s biggest perishables markets, prices have shot up 17-fold since the end of May.

Most other commodities, though, are taking a breather after last year’s surge. The scorching inflation that followed Russia’s February 2022 invasion of Ukraine has eased. Wheat in the wholesale market is 8% softer than at the start of this year, while palm oil has crashed 30% from a year earlier.

Laminates and corrugated boxes have become a lot cheaper, too. That’s bringing in more competition into packaged food, with smaller players turning aggressive on pricing. Demand is weak, particularly in rural areas.

And yet, most Indian consumer staples firms’ profitability is on the mend. Last year, they had to resort to shrinking pack sizes. Now, they can afford to stuff more commodities into them.

That may be the biggest priority for the likes of Britannia Industries Ltd. The country’s No. 1 maker of bakery products sold 9% more of its bread, Good Day cookies, JimJam biscuits and Winkin’ Cow milkshakes last quarter just to hold on to volumes that were flat from a year earlier, according to Jefferies.