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Our internal Consumer Staples Raw Material Inflation Index, which tracks the movement of key commodity prices at a basket level, has now actually entered the negative territory after almost 30 months (1.4% decline in May’23 versus May’22). 5- year CAGR inflation is also coming down slowly and now stands at 4.7% in May’23. Key movers on a MoM basis: Edible & Palm Oil, Barley, Mentha oil, Tea prices have meaningfully gone down while only WPI Potato and Wheat prices (slightly) are up. Key movers on a YoY basis: Brent Crude, HDPE, Copra, Edible & Palm Oil, LAB, Barley, Corrugated paper & paperboard and Vegetable prices have meaningfully gone down while USD/INR, Wheat, Milk and Tea price are up

1) Crude & crude derivatives: Quarterly average Brent crude price has come off further sequentially (-3.6% QoQ in 1QFY24) and down on a YoY basis for the second consecutive quarter (-30.5% YoY). Important to note that, oil prices have rebounded by 7% from their recent low at the end of May’23. Average Highdensity Polyethylene (HDPE) prices are down by just 13.7%/2.1% YoY/QoQ while Liquid Paraffin (LLP) prices are only slightly up 0.6%/0.9% YoY/QoQ, respectively.

2) Currency: Average USD/INR rate have been flat QoQ but still up YoY by 6.4%, which does not augur well for imports of inputs. The rate is now hovering at ~Rs82.

3) Oil commodities: In last 3-4 months, International prices of edible oils have fallen sharply and reached below USD1,000 from the high of USD1,400 per MT. Domestic prices too have cooled off sharply from last years levels, with some rebound seen in June’23. ‘Soyabean Refined Mumbai’ prices are down by 16.2% QoQ (-36.5% YoY). As per data till May’23, made available by Marico Ltd., Copra Calicut is slightly down (-2.1% QoQ). While Safflower Oil and Rice Bran Oil are down by 15.5% and 9% QoQ. After a minor uptick in previous quarter, Malaysian Palm oil prices are down again this quarter (-4% QoQ and thus down sharply 40% YoY). The price of Palm Fatty Acid Distillate (PFAD), a by-product of refined crude palm oil, is up by 6.1% QoQ (but down 40.1% YoY). Mentha Oil prices are down 6.1% QoQ (up 8% YoY).

4) Dairy & Agri inputs: India WPI Milk prices are up by 0.5% QoQ till May’23 and are up 7% YoY. Recent rise in milk inflation can be attributed to many factors including the prevalence of lumpy skin disease in cattle and farmers facing difficulty in procuring feed due to a jump in the cost of cereals. Wheat prices have seen a 8.9% correction QoQ but still up 5.7% YoY (way lower than the double digit inflation seen in the last six quarters). Barley prices have gone down sharply even on a QoQ basis. NCDEX Barley Spot prices are down 23.8% QoQ and thus down 34.9% YoY. Sugar prices are up 5.3% QoQ/ 3.7% YoY. Overall Vegetable prices (WPI) have rebounded from Feb’23 levels but is still down 18.7% YoY (up 5.6% QoQ), with Tomato prices down 57.6% YoY (-4% QoQ), Potato prices down 22.6% YoY (+11.7% QoQ) and Onion prices down 13.6% YoY (-22.4% QoQ). Coffee prices are up 1.1% QoQ (till May’23) but are now down YoY (-3.9%). Average WPI Tea prices are up 9.5% QoQ (up 7.3% YoY). Avg. Maize prices are down 2.3% QoQ but up 4.8% YoY.

5) Other commodities: Laminate Paper (India WPI) price is down just 0.2% QoQ (- 2.5%) while Laminate Plastic (India WPI) price is down 2.7% QoQ (flat YoY). Corrugated Paper & Paperboard and Containers (India WPI) price is down 1.8% QoQ and thus down 5.7% YoY. Fuel & Power (India WPI) prices are down 3.8% QoQ and down 2% YoY.

6) Inflation Trends for our Internal Consumer Staples Raw Material Inflation Index: Our internal Consumer Staples Raw Material Inflation Index, which tracks the movement of key commodity prices at a basket level, has now actually entered the negative territory after almost 30 months (1.4% decline in May’23 versus May’22). MoM inflation for our index is down 2.6% in May’23. 5-year CAGR inflation is also coming down and now stands at 4.7% in May’23.

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