Quote on Recent CPI Inflation Trends and Factors Impacting Food Price from Dr. V K Vijayakumar, Geojit Financial Services
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Below the Quote on Recent CPI Inflation Trends and Factors Impacting Food Price from Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
CPI inflation rose to 4.81 % in June and is likely to rise to around 5.5% in July mainly due to spurt in prices of vegetables, milk, cereals and pulses. The single biggest contributor is the spurt in the price of tomatoes from Rs 26 per kg to around Rs 150 per kg now. Food items account for 46% weightage in CPI and within this vegetables have 6% weightage. Flooding and unseasonal rains damaged crops and caused rise in prices of many food items. Cereal and pulses prices will continue to face pressure for some more time.
Vegetable price rise is seasonal and will come down soon. But price rise in cereals can last longer since global prices influence the domestic prices.
Also, inadequate sowing in the North West and insufficient rain in the South and East are likely to impact the rice harvest. Globally, wheat prices have gone up after Russia withdrew from the Black Sea grain deal.
Regarding pulses, due to unseasonal rains many farmers have switched to other crops from pulses. This will impact supply and push up prices. Difficult to predict the degree of price rise.
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