Easing food prices may help cool India’s consumer price inflation (CPI) in January from the four-month high of 5.7% recorded in December, price trends for food plates and essential commodities for the last month indicate.
Food inflation had hit 9.5% in December, with urban consumers facing a higher 10.4% uptick in prices. Bank of Baroda economists said they expect retail inflation, official numbers for which are due Monday, to slip to 4.7% in January, with the pace of price rise for essential commodities cooling to 3.9%.
Moreover, vegetable thali costs rose 5% year-on-year in January compared to 12% in December, as per Crisil’s monthly food plate assessments, while a non-vegetarian plate cost fell 13%, thanks to a sharp drop in broiler prices.
“The cost of the veg thali increased due to a surge of 35% and 20% on-year in prices of onion and tomato, respectively. Prices of rice (accounting for 12% of the veg thali cost) and pulses (9%) also increased 14% and 21% on-year, respectively,” Crisil Market Intelligence and Analytics said in a note. However, compared to December 2023 levels, both vegetable and non-veg plate costs dipped 6% and 8%.
17 of 20 commodities tracked in the Bank of Baroda Essential Commodity Index have registered softening of prices, including onions, tomatoes, some pulses such as Arhar and Moong, its economist Dipanwita Mazumdar said in a note.
“We expect headline CPI to settle at around 4.7% in January, and a favourable base would also provide the desired cushion to this number. However, what needs to be closely watched is the evolution of these numbers, especially vegetable prices,” she said.
While vegetable price corrections played a big role in the index moderation for January, some of them have started showing an uptick in the first few days of this month.