A sudden spurt in a few food items and essential vegetables like onion and potato has spoiled the mood at the beginning of the festival season. With the Ganesh Chaturthi and other festivals in the days and weeks to follow, prices of essentials could go up even further.
Prices of tomato are still ruling at Rs 70-80 per kg, while many items such bottle gourd, green banana, cucumber and ladyfinger are available for not less than Rs 40 a kg each.
Other seasonal vegetables like cauliflower, peas, beans and pointed gourd too have gone through the roof. The price of pumpkin is Rs 30 a kg now, which was about Rs 15 a kg two months ago, a trader said.
A survey of the retail market in a central Delhi locality showed that prices of most vegetables have shot up in the past one- month and those that had increased earlier, are yet to show any signs of cooling off.
According to data maintained by the consumer affairs ministry, all India modal prices of potato and onion have doubled to Rs 20 a kg and Rs 30 a kg respectively since July 24.
In Delhi, market onion is selling at Rs 40 a kg whereas it was below Rs 10 a kg in June.
While seasonal factors take a portion of the blame for the higher prices, particularly in vegetables, a series of government initiatives off late has also created ground for price rise in pulses and the edible oil segment.
As farmers have been demanding better crop prices after market rates of many commodities fell below their respective minimum support prices, the government took a number steps in pulses and edible oils to pop up domestic rates and give a signal to the farmers to increase the sowing areas.
Accordingly, on Tuesday the government put quantitative restriction on imports of urad and moong dal at 3 lakh tonnes. However, this restriction will not apply if the government wants to import to meet commitments under bilateral and regional agreements.
Earlier this month, the government had also put import of tur dal under the restricted category. The government on August 11 had hiked the import duty on crude palm oil to 15 per cent from 7.5 per cent and on refined varieties to 25 per cent from 15 per cent.
Similarly, the duty on crude soyabean and sunflower oils has been raised to 17.5 per cent from 12.5 per cent.
“A combination of these initiatives has been the main reason why after a long interval there is a spurt in prices of pulses and edible oil," said an analyst.
In the retail market, the all India modal price of urad dal has increased to Rs 80 a kg from Rs 75 kg on July 24. In the same period, rates of moong dal has gone up to Rs 77.50 a kg from Rs 70 a kg, masoor dal to Rs 65 a kg from Rs 55 and groundnut oil Rs 140 a litre from Rs 110 per litre, data revealed.
Traders said chana prices are likely to cross Rs 7,000 per quintal in the near-term on robust festive demand and reports of weak output in Australia and Canada.
In Delhi’s wholesale market, chana prices jumped to Rs 5,900 per quintal on Tuesday from Rs 5,700 a quintal the previous day.
In the edible oil segment, pest attacks due to moisture stress in some parts of Madhya Pradesh, the largest producer, is likely to hit productivity of soybean crop according to a report by the Indore-based Soybean Processors Association of India’s (SOPA).
A survey conducted by SOPA showed that the soybean area under cultivation has declined 6.4 per cent to 10.25 million hectares this year compared with 11.49 million hectares in the year-ago period.
Retail inflation jumped to 2.36 per cent in July, as the price of sugar and confectionery items went up by 8.27 per cent in July while pan, tobacco and intoxicants turned dearer by 6.39 per cent.
Food inflation, however, was (-) 0.29 per cent in July compared with (-) 2.12 per cent in June this year, according to official data.
The contraction in price was witnessed in pulses at (-) 24.75 per cent, followed by vegetables (-) 3.57 per cent and spices (-) 1.67 per cent.
This could see a major change when the government releases retail inflation for August. After a 10-month pause, the Reserve Bank early this month cut benchmark-lending rate by 0.25 per cent to six per cent.
The repo rate is the lowest in more than six-and-a-half years. The financial sector has been expecting further lowering of interest rate, as this could force policy makers not to undertake any cut, for now.