Rising vegetable prices may counteract fall in food inflation

Onset of summer could raise prices of fruits & vegetables 

- SURABHI AND SANDIP DAS

INFLATIONARY PRESSURES MAY be subsiding with the wholesale price index-based inflation entering the deflationary zone, but rising prices of fruits and vegetables due to the onset of summer could still leave households spending more on food items.

Retail prices of vegetables have remained in deflation and fell 6.5% in April 2023 on a year-on-year basis as against a sharper 8.51% decline in March.

Retail inflation in fruits too has been volatile, but was at 2.09% in April, down from 7.55% in March.

However, headline consumer price index-based inflation moderated significantly in the month to 4.7% in April from 5.66% in March. Food inflation also halved to 4.2% in April, the lowest in 17 months, from a peak of 8.4% in September 2022.

Experts point out that prices of fruits and vegetables are the most volatile to weather shocks and tend to rise in summer months, but this year a rise in their prices has been delayed due to the unseasonal rains in March and April. But given the relatively small weight of these items in the overall CPI basket, with vegetables at about 6% and fruits at 2.88%, as compared to the 9.7% for "cereals and products", the impact on overall inflation trajectory tort will be limited.

However, it will still be a concern for households that have been grappling with higher food prices for a while now, and especially those in the low-income segment, where food has a higher share in the consumption basket.