Sharp contrast: At 4.96%, Dec retail food inflation higher than wholesale

Wholesale food inflation declined from 6.06% in November to 4.72% in December

Retail food inflation in December rose to 4.96 per cent, year-on-year, from 4.35 per cent in November. In contrast, wholesale food inflation declined from 6.06 per cent in November to 4.72 per cent in December. 

Retail food inflation has crossed wholesale food inflation for the first time in recent months.

That prices are rising slower for farmers than consumers is more pronounced in perishable commodities like potatoes and tomatoes and in chana (gram), whose prices have slumped after a bumper harvest.

The price of chana fell by 9.2 per cent in Delhi’s wholesale markets in December and by 2.6 per cent in retail markets.

Tomato prices in the wholesale markets of Delhi dropped by 74 per cent in December, while in retail markets they fell 47 per cent. Tomato production in 2017-18 is expected to be 22.3 million tonnes, 7.7 per cent higher than last year. 

Data sourced from private traders show that between November and January the margin between the wholesale and retail price of chana in Delhi markets had widened from 34 per cent to 77 per cent.

For tur the difference has risen from 40 per cent to 50 per cent, for masoor from 72 per cent to 96 per cent and for urad from 65 per cent to 97 per cent.

“Retailers have not passed on the benefit of low farm prices, particularly in some perishables, which is why retail food inflation is showing a certain amount of rigidity,” said Madan Sabnavis, chief economist at CARE Ratings.

Horticulture production at 305.4 million tonnes is expected to outstrip foodgrain production at 275 million tonnes in the 2017-18 marketing year that started in July for the sixth consecutive year.

In December, while the retail price of wheat dropped by 9.5 per cent, its wholesale price fell by 3.5 per cent. This could be partly attributed to the government being a big player in the wheat market, buying at a fixed rate.

The wholesale price of onions in Delhi rose by 10.3 per cent in December, while retail prices dropped by 14.5 per cent. Onion production in 2017-18 is expected to be 21.4 million tonnes, around 4.5 per cent less than last year, while the potatoes output is expected to be 49.3 million tonnes, one per cent more than last year.