Along with vegetables, wheat and edible oil are also the main reasons for food inflation.

16-Dec-2024 04:15 PM

The article discusses the persistent high food inflation in India, driven by the rising prices of wheat and edible oils, along with previously noted factors like pulses, rice, and sugar. While the prices of pulses, rice, and some spices have stabilized or softened, wheat and edible oils continue to see upward price trends, contributing significantly to the high level of food inflation.

Several factors contribute to the rising prices of wheat and edible oils:

  1. Wheat Supply Constraints: There is a long-standing export ban on wheat, but domestic prices continue to rise due to limited stock and uncertainty around future wheat production. This has pushed the wholesale price of wheat in Delhi’s Najafgarh Mandi to Rs 2900-2950 per quintal, up from Rs 2450-2500 last year.

  2. Edible Oil Prices: The global price of palm oil remains high, partly due to its growing use in biodiesel production in Indonesia. Additionally, India has increased import duties on both crude and refined edible oils by 22 percentage points, further pushing prices up. The price of edible oils such as palm oil, soybean oil, sunflower oil, and mustard oil has surged significantly, with prices rising by as much as 50-60% over the past year.

    • Price increases:
      • Packaged palm oil: Rs 95 to Rs 143 per kg
      • Soybean oil: Rs 110 to Rs 154 per kg
      • Sunflower oil: Rs 115 to Rs 159 per kg
      • Mustard oil: Rs 135 to Rs 176 per kg

  3. Inflation Rates: The inflation rates for wheat-related products like flour and refined flour stood at 7.88% and 7.72% respectively in November 2024. Vegetable oils saw an even higher inflation rate of 13.28%.

  4. Market Conditions: Despite the potential for some relief with increased supply of edible oils due to winter season arrivals, the global market conditions and higher import duties continue to sustain elevated prices. Additionally, there is expected to be record soybean production in Brazil, which may offer some respite in the coming months.

In conclusion, while prices of some food items have softened, wheat and edible oils remain significant contributors to ongoing high food inflation in India, with limited immediate relief in sight.

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