New Delhi: Prices of key cereals, pulses and vegetables have remained stable, providing relief to consumers and policymakers amid concerns that the West Asia war could push up India’s food inflation.
As of 9 June, the retail prices of cereals, pulses and vegetables recorded only marginal changes over the past year, according to data from the Department of Consumer Affairs, exclusively reviewed by Mint. This indicates that adequate domestic supplies and government market intervention have helped insulate consumers.
Wheat retailed at an average of ₹30.92 per kg, slightly lower than ₹31.11 a year ago. Chana dal prices eased to ₹81.34 per kg from ₹82.57, the data showed.
Arhar (tur) dal was marginally cheaper at ₹122.75 per kg compared with ₹124 a year earlier, while prices of moong and masoor dal remained broadly stable, reflecting comfortable availability in the domestic market. Rice, a key staple food for about 60% of India's population, retailed at ₹43.43 per kg, while wheat flour was available at ₹37 per kg, the government data showed.
The Reserve Bank of India expects inflation at 5.1% for FY27, subject to upside risks due to global supply chain disruptions, global commodity price shocks, and uncertainty about the distribution of the south-west monsoon. Economists have said a prolonged rise in crude oil prices due to the Iran conflict could push up fuel and transportation costs, eventually impacting retail prices across sectors.
"Food inflation is not very high. It had risen sharply earlier, but then came down and has largely remained flat. When looking at food prices, it is important to consider data over a three-year period. Prices have not actually declined; they have simply stabilized after the earlier increase," said Ranen Banerjee, partner and leader, economic advisory, PwC India. "We expect some upward pressure on food prices. Inflation expectations are often more important than the actual price level. If people expect prices to rise, their consumption and savings decisions are influenced accordingly."
Sufficient stocks
The RBI said adequate stock of foodgrains, and satisfactory reservoir levels will provide some comfort on prices. Managing inflation expectations will be crucial, said Banerjee. The government is banking on comfortable foodgrain stocks to keep cereal prices in check.
"We have sufficient stocks of key commodities such as rice, wheat and pulses," a senior government official said on condition of anonymity.
Stocks held by the Food Corporation of India and state agencies stood at 81.75 million tonnes as of 30 April, comprising 42.8 million tonnes of wheat and 38.96 million tonnes of rice, according to the latest foodgrains bulletin released by the Department of Food and Public Distribution.
Pulse stocks are also comfortable. While the exact quantity of pulses held in the government's buffer stock was not disclosed, the person said the inventory was well above the level required to meet consumption needs and intervene in the market if necessary. The annual consumption of pulses in India is estimated at about 27 million tonnes.
Sugar prices remained largely steady at ₹46.82 per kg, rising by less than ₹1 over the past year. Vegetable prices, often a key driver of food inflation, also remained manageable.
The stability in food prices comes when global crude oil markets are under pressure, raising freight and logistics costs. Despite these risks, the prices of major staples have remained under control.
Potato prices averaged ₹21.49 per kg, significantly lower than ₹25.05 a year ago, while onion prices were little changed at ₹26.76 per kg compared with ₹26.32 a year earlier. Tomato prices rose to ₹40.10 per kg from ₹28.80 a year ago, reflecting seasonal fluctuations common during the summer months.
Retail prices
India's retail inflation, based on the Consumer Price Index (CPI), was at 3.48% in April from 3.40% in March, within the RBI’s target range of 4% with a ±2% tolerance band.
Cereals remain a key driver of food inflation as they form an important component of the CPI food basket, which accounts for 36.75% of the overall CPI under the new 2024-base series.
"Given their importance in household consumption, movements in cereal prices continue to have a significant bearing on food inflation under the revised CPI framework," said Dharmveer, assistant professor of economics at the Delhi School of Economics.
Queries sent to the ministry of consumer affairs, food and public distribution remained unanswered till press time.