New Delhi: India's food inflation has recently surged to 10.9 percent, its highest level in 15 months, primarily driven by rising vegetable prices. In an exclusive interview with ETV Bharat, Ramesh Chand, a member of NITI Aayog, stated that food prices are expected to remain high until January 2025, when fresh crops of onions, potatoes, and other vegetables are expected to bring relief. He further noted that the increase in vegetable prices is the main factor contributing to the current inflationary trend.
Ramesh Chand mentioned that food inflation will begin to decline after two months as new crops hit the market. By the start of the Rabi season, he expects inflation to return to a more comfortable level. He also noted that global inflationary pressures are contributing to the rise in food prices.
He explained that the Consumer Food Price Index (CFPI) is trending upwards, mainly due to the prices of three key vegetables: tomatoes, potatoes, and onions. Once the new crops of Onion and Potato are available, prices are expected to fall, and inflation will decrease. Regarding onions, he mentioned that unseasonal weather had damaged some crops, which created upward price pressure. Additionally, the opening of onion exports further contributed to rising prices. However, he emphasized that the demand from farmers for export opportunities is legitimate, and banning exports for an extended period isn't feasible.
Healthy Crop Outlook
Chand also highlighted that due to good rainfall and favorable water reservoir conditions, India is likely to see a record production of rice and cereals in the upcoming Kharif season.
Inflation Status
In October, the Consumer Price Index (CPI) inflation rose to 6.21 percent, up from 5.49 percent in September and 4.87 percent in October 2023. The Consumer Food Price Index (CFPI) was even higher, at 10.87 percent. Urban CPI was recorded at 6.68 percent, while rural CPI was 5.62%. Similarly, rural CFPI stood at 10.69%, and urban CFPI was at 11.09 percent. As a result, inflation reached a 14-month high of 6.2 percent in October, breaching the RBI's tolerance limit for inflation management.
At the national average of 6.21 percent, there are 10 states where inflation exceeds this level. These states are Bihar, Chhattisgarh, Gujarat, Haryana, Kerala, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh, and Uttarakhand. In contrast, Delhi recorded the lowest inflation at 4.01 percent.
Notable changes in food prices were observed in October. Inflation dropped in categories like Pulses & products, Eggs, Sugar & confectionery, and Spices. However, food inflation overall was still high, mainly due to rising prices for vegetables, fruits, and oils & fats.
In October 2024, the year-on-year housing inflation rate was 2.81%, slightly higher than the 2.72% recorded in September. This data is based on the housing index, which focuses on urban areas only.
For electricity, the national index for October 2024 stood at 162.5, with an inflation rate of 5.45%. This was a small increase from September, when the index was 162.4 and inflation was 5.39%.
Data Collection
To collect the price data, the National Statistical Office (NSO) sends field staff to visit urban markets and villages across the country. In October 2024, they gathered data from 100% of villages and 98.5% of urban markets. However, when it comes to reporting market-specific prices, they were able to report 88.3% of data from rural markets and 92.8% from urban markets.
