Why are milk, vegetable, and pulse prices rising? When will they come down? Here are some indicators

Food inflation in India has been around 8 per cent year-on-year since November 2023, with no signs of easing despite the early arrival of monsoon rains and forecasts of above-normal rainfall. This persistent inflation has kept the headline inflation above the central bank’s target of 4 per cent.

Impact of Heatwave on Food Supplies

A severe heatwave has drastically reduced the supply of key foods like pulses, vegetables, and cereals. Efforts to curb food exports and lower import tariffs have had limited impact. While vegetable supplies typically dip during summer, this year’s reduction is more pronounced due to temperatures being 4-9 degrees Celsius above normal in nearly half of the country.

While presenting the bi-monthly monetary policy on June 7, Reserve Bank of India (RBI) Governor Shaktikanta Das cautioned that the extremely hot summer and low reservoir levels could further strain the summer harvest of vegetables and fruits. Das emphasized the importance of closely monitoring the rabi arrivals of pulses and vegetables. Food inflation has been impacting the Indian economy since 2023, with several categories experiencing notable price increases. Government data shows year-on-year inflation rates as follows: vegetables at 28 per cent, pulses at 17 per cent, cereals at 8.6 per cent, meat and fish at 8.2 per cent, spices at 7.8 per cent, and eggs at 7.1 per cent.

Will Monsoon Help in Reducing Prices?

Despite an early start, the monsoon’s momentum has slowed, resulting in an 18 per cent rainfall deficit so far this season. This weakened monsoon has delayed the planting of summer crops, which require adequate rainfall for optimal growth. The delayed monsoon in several regions of the country has raised concerns about the cultivation of kharif crops like paddy, pulses, and soybeans. However, experts believe that any shortfall can be largely mitigated if rainfall increases by the first week of July. The weather office has forecasted above-average rainfall for the rest of the monsoon season.

When Will Prices Come Down?

Vegetable prices may decrease from August if the monsoon revives and covers the country as expected. However, prices for milk, cereals, and pulses are likely to stay high due to tight supplies. Major mil supplier like Amul and Mother Dairy recently hiked prices of milk products. Rice prices may also rise as the government has raised the minimum support price of paddy rice by 5.4 per cent. Additionally, sugar prices are expected to remain high as next season’s production is anticipated to drop.