Retail food inflation in India escalated to a three-month zenith of 9.24% in September, marking a sharp rise from 5.66% in August, primarily driven by a significant increase in vegetable prices alongside edible oils entering the inflationary trajectory. Sequentially, the consumer food price index (CFPI) experienced a 1.17% increase in September over August. This period last year recorded a food inflation rate of 6.62%.
The inflationary pressure in the food and beverages sector for September, relative to August, was predominantly due to vegetable inflation, which soared to a 14-month high of 36% in September, up from 10.7% in the prior month. Notably, inflation in onion and potato prices surged by 66% and 64.9% respectively in September. Additionally, tomato prices saw a 42% increase last month due to a base effect, following a sharp 47% decline in August, attributed to high prices a year prior.
The agriculture ministry forecasts a decrease in the output of potato and onion for the 2023-24 crop year (July-June) to 56.76 million tonne (MT) and 21.23 MT, marking reductions of 6% and 20% respectively. Following a year of deflation, edible oils witnessed a reversal with a 2.47% inflation in cooking oil prices in September, spurred by an increase in import duties. Mustard inflation was recorded at 6.31% last month.
Pulse inflation moderated to 9.8% in September from 113% in August, thanks to the anticipation of a robust kharif harvest and imports. Retail inflation in pulses has been in double digits since June, 2023, due to reduced output of key varieties such as chana, tur, and urad. The gram split variety reported the highest price increase of 21.2%.
Overall cereal inflation was 6.84% in September, a decrease from 7.31% in August, driven by a reduction in rice and wheat prices. The government has initiated open market sales of rice to bulk buyers at a subsidized rate and lifted restrictions on rice exports.
"The current rise is attributed to the increased prices of vegetables which went up 36% y-o-y. With a normal monsoon in the current year, we expect fresh supplies to hit the market in coming days and the food prices to moderate," stated Sujan Hajra, chief economist, Anand Rathi shares and stock brokers.
Inflation in the meat and fish category was notably lower at 2.6% last month, with chicken prices decreasing by 3.1%. Milk price inflation was also modest at 3% on a year-on-year basis. In contrast, inflation in spices saw a decrease of 6.1%, with jeera prices notably declining by 31.8% on a year-on-year basis.
Source: Financial Express