The spike in food inflation in July is not necessarily because of the 5.30-10.35% hike in the minimum support price (MSP) of Kharif crops. In fact, the 13 food crops for which MSP was announced on June 7 this year have a combined weight of just 2.748 in the Wholesale Price Index (WPI), and even among them, four show a lower WPI-based inflation in July compared with last July.
Cereals are part of a larger ‘Food Articles’ category which has a weight of 15.255 in the WPI.
The data shows that the rate of inflation for this category stood at 14.25% in July, higher than 10.77% in July last year.
In the MSP hikes that came in June, the maximum 10.35% was for moong, followed by sesamum (10.28%), cotton-long staple (10.03%), groundnut (9.0%), cotton-medium staple (8.88%), jowar-maldandi (7.86%), ragi (7.49%), jowar-hybrid (7.07%), paddy -common (7.01%), soybean-yellow (6.98%), paddy-grade A (6.94%), maize (6.52%), bajra (6.38%), niger seed (6.13%), tur/ arhar (6.06%), sunflower seed (5.63%) and urad (5.3%).
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Four crops — bajra (9.09%), maize (-0.05%), sunflower (-21.56%) and soyabean (-15.95%) — recorded a lower inflation in July compared with the corresponding month last year, shows an analysis of the WPI based inflation data.
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Higher WPI inflation was recorded for paddy (9.03%), jowar (34.19%), ragi (11.85%), arhar (32.28%), moong (13.72%), urad (10.37%), groundnut (18.55%), sesamum (27.34%), and niger seed (16.95%).
As far as the retail inflation based on the Consumer Price Index (CPI) is concerned, it was lower for bajra and its products (5.68% in July this year compared with 23.11% in July last), and maize and its products (9.64% in July this year against 15.22% in July last). For other items like rice, jowar, and arhar (tur), retail inflation was in double digits for several months before the MSP announcement in June.
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Overall, the Consumer Food Price Index, which has a weight of 39.06 in the CPI, recorded 11.51% inflation in July this year against 6.69% last year. The sharp hike in the food inflation in July this year was largely attributed to a high inflation of vegetables (37.34%).
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