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Resource centre on India's rural distress
 
 

Why volatile food prices will keep the heat on India’s consumer inflation level this year -Radhika Pandey

-ThePrint.in

Lower rainfall in some parts of the country is expected to keep food prices elevated in the coming months. Which means inflation will be above 6%.

India’s retail inflation surged to 7 per cent in August from a five-month low of 6.7 per cent in July. Food, which accounts for nearly half of the Consumer Price Index (CPI) basket, grew 7.62 percent as against 6.69 per cent in July. While the prices of edible oils eased, the prices of cereals, pulses, milk, fruits, vegetables and prepared meals and snacks saw an uptick.

Cereal inflation rose sharply to 9.57 per cent in August against 6.9 per cent in July. Cereals prices were impacted by adverse weather conditions and lower procurement. Prices of vegetables continue to remain in double-digits, increasing from 10.9 per cent in July to 13.23 per cent in August. Given the lower rainfall in some parts of the country, food prices are likely to remain elevated in the coming months.

Moderation in edible oil prices

Domestic edible oil prices are influenced by international edible oil prices. After peaking in March, the international edible oil prices measured by the Food and Agricultural Organisation’s (FAO) Vegetable Oil index have seen a moderation. 

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