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Rice gets pricey on supply concerns, wheat stays costlier. Here’s why
- As per the consumer affairs department data, on August 23, the all-India average retail price of rice stood at ₹37.63 per kg higher by 6.2% yoy. Meanwhile, the price of wheat climbed by 14% to ₹30.89 per kg against ₹27.09 per kg on August 23 last year.
Rice has gotten pricey, but the spike is at a much slower pace compared to wheat which has recorded a double-digit rise in retail prices year-on-year. The daily price data of Consumer Affairs shows that the prices of the majority of essential commodities have risen as of August 23 compared to the same period last year. The lag in paddy sowing during the summer Kharif season is worrisome ahead.
As per the consumer affairs department data, on August 23, the all-India average retail price of rice stood at ₹37.63 per kg higher by 6.2% from ₹35.43 per kg on the same day last year. Meanwhile, the price of wheat climbed by 14% to ₹30.89 per kg against ₹27.09 per kg on August 23 last year.
However, the price of wheat is lower from ₹31.04 per kg on August 22, 2022. On Thursday, the price of wheat had climbed by around 22% on a year-on-year basis.
Furthermore, the price of wheat flour (atta) surged by 14.9% to ₹35.34 per kg on August 23, 2022, against ₹30.76 per kg on the same period a year ago.
As per a PTI report, the rising trend in the retail price of rice was due to supply concern and drop in production in view of lag in Paddy sowing in the ongoing Kharif season. While for wheat, both retail and wholesale prices are under pressure due to a drop in domestic output to 106.84 million tonnes in the 2021-22 crop year. Also, the heatwave in the northern region that strangled gains is said to have impacted wheat production.
Earlier today, talking about market performance, Mitul Shah - Head of Research at Reliance Securities said, " concerns have spurred as paddy sowing continues to lag since area under the key Kharif crop was lower by 8.25% at 343.70 lakh hectare till last week of the ongoing Kharif season." The data is from the agriculture ministry.
Bank of Baroda economist Jahnavi Prabhakar in the latest research note, highlighted that as of Aug 20, 2022, sown area of pulses (5.3%) has declined compared with last year. Within pulses, a significant drop in acreage has been registered in Arhar (7.2%), Urad (5.1%), and Moong (4.6%). Area sown for rice (12.4%), oilseeds (1.3%), and sugarcane (1.2%) continues to remain low compared with last year's levels. On the other hand, acreage of cotton has improved further to 6% on a YoY basis from 5.3% in the corresponding period last week.
Notably, as per the Food Corporation of India, reserves have declined in August to the lowest level for the month in 14 years, while wheat inflation is running at close to 12%.
In the minutes of the monetary policy committee (MPC) for the August 2022 policy, Dr. Rajiv Ranjan, executive director at RBI said, "Going forward, though the fall in international commodity prices and the progress of the monsoon provide room for optimism, there is considerable uncertainty, particularly from the spatial and temporal distribution of monsoon and its implication for Kharif paddy production, the depreciation of the INR exchange rate and pending pass-through in services. Importantly, the global geo-political scenario – the source of much of the price shocks – continues to remain unsettled."
Further, RBI in its outlook stated that the shortfall in paddy sowing, however, needs to be watched closely, although stocks of rice are well above the buffer norms.
The Centre has a huge stock of 396 lakh tonnes of rice and experts believe the government will intervene if the prices surge sharply.
Meanwhile, on August 23, the price of tur/arhar dal rose by 4.44% to ₹110.04 per kg against ₹105.36 per kg on the same day last year. Sugar and milk price has climbed by 3.73% and 7.28% yoy to ₹42.02 per kg and ₹52.73 per kg respectively.
On the contrary, Gram Dal got cheaper as the price dipped to ₹73.48 per kg from ₹74.49 per kg on August 23, 2021.
Moreover, the price of ground oil (packed) surged by 8.6% yoy to ₹188.2 per kg, while vanaspati (packed) price climbed by 14.29% yoy to ₹153.46 per kg on August 23.
In vegetables, the retail price of potato surged by a massive 35.06% yoy to ₹27.81 per kg, and the price of tomato soared by 15.4% yoy to ₹34.78 per kg. However, the price of onion fell to ₹25.86 per kg on August 23 compared to ₹29.51 per kg a year ago same period.
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First Published:23 Aug 2022, 09:36 PM IST
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