Food inflation may remain cause for concern owing to heatwave: ICRA`s Aditi Nayar
ICRA Chief Economist Aditi Nayar has said the wholesale food inflation, which is at a four-month high, will continue to be a cause for concern in May and June as heatwave is likely to jack up prices of perishable commodities. Although the impact of high base of last year will play out in July and August, the impact of monsoon will determine the price conditions in the subsequent months.
The wholesale price index (WPI)-based food inflation was at a four-month high of 7.74 per cent in April. Retail food inflation also remained stubbornly high at 8.70 per cent in April 2024, as against 3.84 per cent in April 2023.
Nayar said weather is an important factor in determining the food inflation trajectory. Monsoon was not very favourable last year and this year there are heatwaves in parts of the country. She stated ‘With the onset of summer, prices of perishable items are charting upwards. For the next two months, we expect the food inflation to climb further and then as the base effect turns very supportive, we will end up with temporarily plunging readings in July-August this year’.
