Feb 15, 2020
Onion prices may have cooled and down, but for other food and grocery inflation is likely to remain high which is the core point to worry about.
The consumers startling staring at rising prices of food items are unlikely to find much relief as the market analysts believe that retail inflation are likely to be peaking now and have cautioned that these prices will remain high in coming months creating a wavering demand.
High priced food items include cereals, meat, fish, milk, pulses, oils and sugar — all of which seem to be on a rising graph keeping the consumers walking on the tight rope.
The steep hike in LPG cylinder prices of ₹144.5 in Delhi to ₹149 in Kolkata will add to inflationary pressures.
Analytical official data indicated the retail inflation rosed to a 68-month high of 7.59 per cent in January, against 7.35 per cent in December 2019 and 1.97 per cent in January 2019.
“Protein inflation (based on meat and fish, egg, milk and pulses) inched up to 42-month high of 9.2 per cent due to a sharp increase in milk prices. Milk inflation increased to 5.6 per cent in January 2020, up from 0.7 per cent twelve months ago. This shows that there is more to the food inflation story than just high onion prices,” noted ICICI Securities in a research report. The report also noted that while the base effect is expected to turn favourable from February, inflation could remain elevated for the remaining two months of the fourth quarter.
Sunil Kumar Sinha, Principal Economist, India Ratings noted that except food and housing, inflation for all broad groups increased sequentially in January 2020. “This is suggestive that inflation may be slowly turning structural even though vegetables inflation, which is largely cyclical, has remained in excess of 30 per cent since November 2019. India Ratings expect cereals inflation to remain high till October 2020. The prices of meat and fish, egg, milk and products, and services inflation is rising,” he said.
According to a BofA report, the CPI retail inflation in February could come in by about 7.3 per cent.
The Reserve Bank of India in the sixth bi-monthly monetary policy statement has mentioned that the recent pick-up in prices of non-vegetable food items, especially in milk — was due to a rise in input costs, and in pulses due to a shortfall in kharif production, are all likely to sustain.