Retail Inflation Again Above RBI's Comfort Level In January
By A Special Correspondent
First publised on 2023-02-15 09:25:24
About the Author
After a
couple of months of downward trend on the back of lower food inflation (mainly
due to falling prices of vegetables and fruits), retail inflation in India, at
6.52% in January, has once again breached RBI's tolerance band. This is due to
the rise in the prices of milk and milk products, eggs, fish and especially
cereals. Cereal prices rose by 16.12% in January causing a spike in the overall
retail inflation. This is a cause for worry as given the buffer stock of wheat with
the government, the situation is going to worsen in the months ahead.
Although
advance estimates released by the government for grain output this year show a
record production of 324MT, this is mainly due to all-time high rice yield at
131MT. Though this is going to cool prices to some extent, wheat production is
up by only 4.67% to 112MT from last year and India's wheat production had
suffered due to untimely heat wave in March last year. Further, advance
estimates for wheat can go for a toss as scientists have predicted that El Nino
is set to return this year. If this results in a repeat of last years' heat
wave in February-March, wheat production will suffer. The relief might come
from prices of cooking oils as oilseed production has increased handsomely with mustard
showing a healthy increase of 7%. But the overall retail inflation situation
remains uncertain.
