New Delhi: A group of commodities from summer harvesting, such as pulses, could keep household spending on food items high,early market trends show, potentially sustaining pressure on supplies for longer than thought. This is likely to prompt the government to continue with a spate of trade restrictions currently in force to tamp prices down.
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Analysts say they foresee price pressures building up in lentil varieties such as pigeon pea (tur) and black gram (urad), sugar, maize (corn), sorghum (jowar) and a few types of oilseeds (the source of vegetable oils) on the back of smaller crops this season. Besides, refined sugar prices are at nearly a six-year high at ₹42 per kg, although this is quite below international prices of ₹58 in anticipating of a global supply shock. An uneven monsoon this year, which ended 5.6% below normal, shrunk acreages of several summer-sown crops.
Retail prices of pigeon pea (tur), a commonly consumed ‘dal’, have jumped to ₹177 a kg in the national capital, up from last year’s ₹113, a rise of about 58%. Andhra Pradesh’s rates followed Delhi’s, ruling at ₹175 a kg. That this variety of “dal” will remain expensive is borne out by the countrywide retail modal price (a type of average price) at ₹160 a kg on Friday, up nearly 40% over last year, analysts said.
High food prices tend to hurt poorer households more since low-income families spend a higher proportion of their monthly budget on food, relative to other purchases.
Battling high food inflation, the government has invoked a series of measures to boost supplies and stabilise prices. Retail inflation in August, driven by food, rose to 6.83% from a year ago, remaining above the Reserve Bank of India’s tolerance of 4% (+/-2), according to official data.
RBI governor Shaktikanta Das on Friday flagged food-inflation risks, saying “recurring large overlapping food price shocks can impart generalisation and persistence to headline inflation”, meaning elevated food prices could spill over to other sectors, which could make inflation sticky.
“Lower sowing of some key crops will keep price pressure up, especially of pulses,” Abhishek Agrawal, an analyst with Comtrade said. On Friday, RBI decided to leave its benchmark repo rate unchanged for the fourth straight time, keeping it at 6.5%. Vegetable prices will have substantially come down in September due to new harvests, for which data will be released next week.
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The area under pulses was lower by 4.2%, with the acreage of pigeon pea turning out to be less by 4.9% than last year. The sorghum crop shrunk 8.8% over last year while the oilseeds group of crops was lower by 1.6%. Overall, the net summer-sown area was nearly the same as last year at 110 million hectares, but since the rains were scanty in many regions, yields are likely to be impacted in many crops.
To ease prices, the government had banned wheat export in May 2022. It barred shipments of non-basmati rice in July this year, imposed a 40% duty on overseas onion sales in August 2023 and also removed tariffs on import of pulses.
