Unlike domestic inflation print, globally food prices ease across categories

New Delhi, July 14 (SocialNews.XYZ) With a weightage of 0.57 per cent in the CPI basket, pricing pressures in Tomato is unlikely to substantially impact the headline inflation unless prices of other two main crops (potato and onion) move in tandem, JM Financial Institutional Securities said in a research.

The higher than expected headline inflation (4.81 per cent  vs 4.6 per cent  est.) was on the back of sharp uptick in inflationary pressures in the vegetables and pulses category.

The deflationary trend in the vegetable category almost reverted to inflationary phase (-0.9 per cent  YoY vs -8 per cent  YoY prior) in June'23, with a substantially strong momentum (12.2 per cent  MoM vs 3.6 per cent  MoM prior).

Within vegetables, retail prices of tomato increased to Rs 57/kg by the end of June, while at the start of the month it was available at Rs 25/kg. It is pertinent to note that by 10th of July, tomato was trading at Rs 105.4/kg which would reflect in the July month's inflation print unless appropriate supply side interventions are taken to ease the pricing pressures, the report said.

Tomato has a weightage of 0.57 per cent  in the CPI basket while Tomato, Potato and Onion collectively forms 2.2 per cent  of the CPI basket, we believe that pricing pressures in tomato alone would marginally impact the CPI print unless the prices of other two crops move in tandem, the report said.

The sharp sequential uptick in pulses (3.42 per cent MoM) was offset by the weakness in oils and fats category (-3.24 per cent  MoM) in June'23.

Unlike domestic inflation print, globally food prices continued to ease across categories. As per the FAO index, even cereal prices were down in June (24 per cent  YoY, 2.1 per cent  MoM).

The deflationary trend in vegetable oil prices (-18 per cent  YoY, -3.24 per cent  MoM) was on the back of ample global supplies coinciding with subdued global import demand.

Source: IANS