Edible oils, pulses play key role in retail inflation

Retail prices of edible oils and pulses are the major contributors to increase in retail inflation since March last year.

On Monday, National Statistical Office (NSO) reported that retail inflation based on Consumer Price Index rose 5.52 per cent year-on-year in March to 156.8 points.

A close scrutiny of data showed prices of edible oils increased nearly 25 per cent since March last year, while those of pulses and products saw retail inflation rate increase 13.25 per cent during the period. BusinessLine reviewed the price trend to trace the root of the problems.

Retail data, collected by Department of Consumer Affairs, showed a different trend of the prices of various edible oils. For example, prices of packed mustard oil, sunflower oil and palm oil increased in February. But in March, mustard, soyabean and sunflower rates were down, while retail prices of palm oil increased.

However, as on April 12, barring palm oil, all edible oil prices have witnessed a rise. Even groundnut oil, which was constant for first three months, increased by ₹12 a kg in April.

BV Mehta, Executive Director of Solvent Extractors Association of India, said domestic market is following global price trends, albeit at a slower pace. He said that prices of soya oil have surged to $1,260 a tonne this year from around $664 last year. Similarly, sunflower oil rose to $1,580 from $760 and palm oil to $1,160 from around $600 during the same period.

“International prices saw a surge up to 90 per cent, but in India it is around 50 per cent,” he said.

In view of the rise in prices, the Centre was urged to cut the Customs duty on edible oils. Commerce Minister Piyush Goyal told Parliament last month that the rise in prices of domestic edible oils had not increase as much as the rates in global market. Indications are that as of now, the Centre has no plans to reduce the Customs duty.

India has an annual demand of around 230 lakh tonnes (lt) for edible oils. Of this, local production is around 70-80 lt, while import fulfils rest of the requirement. Mehta said that with better expectation of crops (mustard, groundnut and soyabean), prices are likely to decline from May onwards.

At the same time, prices in international market also expected to see a fall which will have an impact on the domestic prices here.

Mixed trend in pulses

Another key ingredient of Indian food, pulses saw a mixed trend during first three months. Gram, moong and masoor prices increased in March compared with previous months. Urad was subdued but tur prices were up. The Government told the Lok Sabha last month that production of pulses is estimated at 116.20 lt during the current crop year to June against 118 lt the previous year.

Despite this, import is lower at around 3 lt during 2020-21 against 3.71 lt during 2019-20. Experts feel that lower production has impacted the prices. However, with monsoon expected to be normal this year, prices may see some moderation in coming months.

COMMENT NOW