With prices of vegetables witnessing sharp rise, its highest in 19 months, Union Finance minister Arun Jaitley took the stock of situation on Wednesday afternoon. Union Transport minister Nitin Gadkari, Food Minister Ram Vilas Paswan, Agriculture Minister Radha Mohan Singh and Commerce Minister Nirmala Sitharaman were also present in Jaitley’s meeting along with other key officials.
A very steep rise in the vegetable prices, especially the tomatoes, has pushed wholesale price inflation to 0.79 per cent in May — the fastest pace since October 2014 – setting the alarm bells ringing.
WPI Inflation in vegetables stood at 12.94 per cent in May, a sharp rise from 2.21 per cent a month earlier, while that of Pulses remained high at 35.56 per cent. According to the data released by government, food inflation rose to 7.88 per cent in May as against 4.23 per cent in April.
The government is also sensing the impact price rise will have on the consumers on its daily need products. On Wednesday, the team of ministers discussed the steps to be taken to boost the supply of pulses through its newly-created buffer stock and also from imports.
Tomato prices in most retail markets across the country have doubled up at Rs 80 per kg in the last 15 days due to sluggish supply owing to crop damage. Potato rates too have also been on the rise, while the retail prices of pulses are still ruling high at over Rs 170 a kg.
The faster-than-expected 0.79 per cent rise in wholesale prices comes on top of consumer prices (retail inflation) surging 5.76 per cent in May, the fastest rate in 21 months.
Wary of the price rise and anticipation of hike in oil prices in the future, the industry too is demanding policy action to address supply-side constraints.
“The trajectory of the WPI inflation would be shaped by global commodity price movements. If crude oil prices sustain at current levels, average WPI inflation is likely to exceed 3 per cent this fiscal,” ICRA Senior Economist Aditi Nayar said.
“Policymakers need to address through supply-side responses the continuous rise in prices of commodities like pulses, food articles, cereals, wheat and other items,” Assocham Secretary General DS Rawat said.
However, amid the worry of rise in prices, experts believe that a favourable base effect and a good monsoon would lead to some dip in wholesale food inflation in the immediate term.
After two consecutive years of drought, the India Meteorological Department has predicted an ‘above-normal’ monsoon this year.
(With inputs from the PTI)