EnglishHindi
- Follow us
-
-
-
-
-
-
Price Hike: In most of the Indian households in rural regions, food accounts for almost half of monthly spending and nearly 40 percent in major cities. Onions, which are a basic and essential ingredient of any dish, have increased by almost 50 percent, compared to last year. The prices of vegetable oil, mainly used in street snacks, are also rising. Not only that, the price of ginger has also witnessed a surge of more than 70 percent, as per the latest consumer price index for August.
Factors that drive the prices are: a weaker annual monsoon, diverting grain for increasing biofuel production, and wars in both Iran and Ukraine are boosting fuel prices globally.
The southwest monsoon rains are one of the major reasons as the precipitation since June is running 15 percent below normal. IMD has also predicted monsoon showers to remain subpar in September. The major reason for the shortfall is El Nino weather phenomenon.
Less rain can directly affect the harvest outlook for crops from rice to soybeans, corn and sugar cane.
As compared to last year, rice and corn plantings are running over 3 percent behind and farmers have very little time left. Domestic sugar prices surged in August on worries of a shortfall. This forced the central government to allow duty-free sugar imports.
Less rain will also dim the harvest outlook of soybeans, corn and sugarcane.
Centre’s biofuel policy is also playing a significant role. When the country is pushing for 20 percent ethanol-blending, the demand for corn and rice as feedstocks alongside sugar cane has been increased.
The growing demands could further tighten domestic supplies. Farmers are expected to sell crops to ethanol makers as they get higher prices from them.
Chicken and egg sellers in Mumbai and adjacent areas are facing problems due to an increase in feed prices for the live birds. The prices of fees doubled in the last month. Hence, the sellers are forced to increase the prices of chicken and eggs. Broiler chicken prices increased to Rs 260/kg from Rs 240. The prices can increased further in the coming weeks.
Daily essentials, dairy items like paneer and milk, have become more expensive, as per Central Statistics Office data.
Preparing food has become more difficult due to the rising cost of liquefied petroleum gas (LPG). The prices of cooking gas increased due to the conflict in West Asia. The recent hike in commercial gas prices has also increased the cost of prepared food.
Food inflation could affect interest rates as central banks target overall consumer inflation. Notably, inflation also surged last month to its highest level since December 2024, remaining above the RBI’s 4 percent target for the third month.
The central bank has identified El NiNo as a major risk to food prices. The financial institution has kept interest rates unchanged this year.
According to economists, there is a higher chance of an interest-rate hike as early as October.
For breaking news and live news updates, like us on Facebook or follow us on Twitter and Instagram. Read more on Latest Business News on India.com.
