New Delhi: A drastic fall in vegetable and pulse prices has led to India’s retail price inflation slowing to its lowest level in five years. The Consumer Price Index, India’s benchmark inflation index was 1.54% in June. The food sub-index, which fell to negative territory, was the biggest contributor to the softening of retail prices.
A release by the Ministry of Statistics and Programme Implementation on Wednesday showed that vegetable prices contracted by 16.5% while pulses fell nearly 22%. The overall food and beverages sub-index contracted by more than 1%, leading to softening of the consumer price inflation.
A record production of food grains on the back of a normal monsoon last year and imports of pulses and wheat have contributed to the decline in the prices of agricultural products. The forecast for monsoons this year is normal and analysts expect the downward trend in food prices to sustain.
Deflation in the prices of agricultural commodities has led to unrest in the countryside, with farmers demanding that the government compensate them for losses arising from selling their produce at losses. They are demanding that the government procure their produce at the cost of production and pay them 50% above that.
Some states have started doing that. Madhya Pradesh announced a month ago that it would procure onions from farmers at Rs 8 per kg in order to save farmers from the market price of Rs 3-5 per kg.
In another data release the Index of Industrial Production, which is a gauge of industrial activity in the country, rose 1.7% in May from a year earlier.
The Consumer Price Inflation data is collected statewise for both urban and rural areas. The inflation rate was lowest in Chhattisgarh (-2.53%) and Odisha (-0.59%) and highest in Jammu & Kashmir (5.77%) and Delhi (4.39%).
Among the various sub indices, meat and fish prices rose 3.49%, while milk and milk products increased by 4.15%. Clothing and footwear prices increased by 4.17% while fuel prices rose 4.54%.
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